HomeMy WebLinkAboutREFAC Minutes 1-13-2010_Verbatim 1
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REFAC 1 -13-2010 Verbatim Transcription:
6.) Round III Ranking
This item would be discussed in open session.
P Crimp:
For now we did send an email w/5 pdfs on it ½ hour ago. The rankings are on those sheets.
[all received as well as Sen. Hoffman’s office] They were on the phone.
Why don’t we go to the regional summary that’s on the screen now. That is the 8.5x11 sheet, it says at
the top of it “Alaska Renewable Energy Fund Regional Summary Round 3 Ranking”
Go to the sheet Renewable Energy Fund Rd 3 Ranking All.
The area in green, it’s ranked from top to bottom by the Rd 3 scores. Top of list is in the energy region
Copper River/Chugach, Project Name is Humpback Creek Hydro Project, #407.
From top to bottom on that from the Rd 3 maximum score, there are 88 projects that are ranked, the
total amount that AEA is recommending is $61.5 million.
The green area are the top $25 million.
Yellow are the second $25 million.
If you look over at the cumulative funding in last col on right that will give you, as you go down the list
what the amounts are. We added a third shaded area, the orange shaded area, which totals $11.5
million over the $50 million.
The final projects are those which are not in any color – they are not recommended by AEA. There are 2
recommendation categories:
• Did not pass Stage 1 and
• Not recommended – didn’t pass Stage 2 , the technical & economic review.
The white non-color entries mean that AEA is not recommending those, not due to funding, but due to
the basic issues that we have with the projects.
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Steve: Remember last year we went thru a ranking structure and we had the whole program pulled up
and all the comments were in there. These are all the points that worked their way thru the ranking and
we sorted them by total points. If you want us to go thru that program, we’ll be happy to do that.
Chris: My understanding is that from meeting the minutes of the last meeting that you increased the
weight of the benefit cost ratio, and that’s the 25 points, under this review scores, cost of energy? Is
that where that extra weight is, or is it in the technical & economic feasibility, #3?
Peter: I have to do this from memory, the cost of energy….is the cost of power in that community & we
did update that for this last year. That was weighted 30 percent. It’s now rated 25%, it is still the highest
weighted item. Match also went down by 5%. The amount of match provided. The technical &
economic feasibility stays the same. Within the technical & economic feasibility, the BC (benefit to
cost) ratio has increased in weight.
Peter: That’s correct. Also readiness is up to 10 from 5, so projects that are ready to construct get a
little more weight. Benefits was 10 points last time, it’s now 15. Again that BC score is part of that one
too. All told, the BC score is around 18% of the total score when you look at those two categories. Local
support sustainability is the same.
Chris: Were there any other significant changes to the criteria for looking at things like sustainability or
readiness from the last time, but were there new things that you’re looking at to judge that?
(13:53)
PC: We tightened up the evaluation guidelines. For readiness, for instance, 4 points were assigned if a
project had completed feasibility or earlier stages of project development already. An additional 2
points if permits were ready to go; another 2, the full 10 if its in construction just needs money to
proceed. The second 2 were in order to order a long lead time item. They completed their feasibility,
they’re ready to go, they need to put money down on say a wind or hydro turbine or other equipment.
PC:
Benefits. The non BC benefits, because there are other benefits in addition to the BC ratio, we tightened
that category down to actually list the other benefits that are not generic to renewable energy, i.e., flat
price of power, or decreased greenhouse gases. That’s common to everything, so we didn’t count that ,
what we did count were things like a road will be developed that would be useful for other purposes or
a water supply would be developed in conjunction with a project or logging from a biomass project will
create more jobs in a community up and above what they have already.
Back to Regional Spreading. This is the projects that are sorted by regions, they’re exactly the same
projects, just sorted differently, you have more subtotals by the individual categories.
Chris: As you go down the list thru yellow and into orange, there become some projects that have a
benefit cost ratio of less than one, so, there must be, maybe some discussion, are any of those projects
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being granted money, what are the other benefits of it that would justify the grant if the BC is less than
one?
(16:32)
PC: For many projects, the benefits can’t be analyzed.
PC: yes. Go to 505, West Cook Inlet Energy Cumulative Impacts. This project studies the impacts of
developing transmission and projects in general on the West Cook Inlet side, that would be looking at
Chakichamna hydro, fish & wildlife impacts, spur, it would be 2 met towers at the west moorlands
where there’s a good wind resource. But it’s doesn’t lend itself to quantification, so ISER concluded that
that wasn’t appropriate. Projects get dinged for that. If they get a zero, that’s a lower score. Basically
what this means is that a project that you can’t really get your arms around very easily that can’t be
quantified is somewhat of a disadvantage. This particular project – we can go into the database at any
given time if you want to look at the details – this project did score very well on public benefits in
general. That Spurr, Chakichamna, those were projects in the Railbelt IRP are recommended, or found
favorable. For that reason it makes sense to go ahead with studies and other reasons. Cost of energy
was fairly low match. There was no match, technical good idea. Readiness some work done in past.
Benefits 2 pts, probably for adhering to their Railbelt IRP. No support letters were submitted with it.
Sustainability had a 5. In 15 yrs if there was a transmission developed out there, AEA felt that it would
be a sustainable project still in operation.
CR: the reason I’m asking the question and we’ll probably get into this when we talk about geographic
spreading, but it’s more of a philosophical question, because some of the concerns I’ve been hearing
from people generally about the program is the money is being spread out too thinly. So that there’s
not enough projects that are actually happening right away because we’ve been trying to fund a lot of
projects and we all want to see a lot of projects go in leverage of the money and go if they can, we don’t
want to fund projects that aren’t going to work or have a real positive benefit. Would it make more
sense to give more money to fewer projects that have higher scores, rather than dealing with the
projects that have lower scores and may not have the benefit cost ratios that we want to see. Have the
money go to the projects that really need it, who scored really high. I don’t want to necessarily get into
that whole discussion right now but I think it’s something we have to consider.
(22:40)
SH: Regional spreading. You can’t say you’re only going to do the best projects because it doesn’t
match regional spreading. You’re going to unwind it anyhow. It’s kind of a dilemma we have that we’re
trying to balance here, but we should talk about it.
PC:
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Cost of energy in match. The first two categories is 45 out of 100 points. That follows basically from the
legislation and the regulations that AEA came up with. What we did this time around responding to the
idea that the inherent economics of a project should drive the selection is increase that.
(Goes down project list)
In the green area one thing to keep in mind is that this is what happens with $25 million. We’re at 19
projects. (Top 19 projects):
These projects are generally fully funded. We’re not spreading it around too much. Take a look at these
under the grant programs, starting from top, Humpback Creek Hydroelectric Project Rehabilitation
would be completed from the short funding.
Yerrick Creek Hydroelectric Project is another construction project.
Kotzebue Electric Wind Farm is another $4 million for that. That would allow Kotzebue to complete a
large wind farm.
St. Paul Island Wind Diesel Project, is to fund TDX to integrate existing wind system on St. Paul with the
city system in a manner that would be responsive to the city’s concerns.
District Wood Heating in Ft. Yukon, would result in a wood-fired district heating system in Ft. Yukon.
Full funding.
Alaska Sealife Center, that would be co-funded with Denali Commission that would result in a water
source heat pump. Completed too.
Mt. Spurr is an enormously expensive project, that would be drilling in Mt. Spurr, actual physical
activitity.
Pilgrim Hot Springs Geothermal Resource, drilling there.
Akutan Hydro, repairs that project and get it up and running.
City of Craig Fuel Dryer Project, will help pay for a fuel dryer for POW Island for use in the Craig biomss
project but for use in a lot of other projects so that’s hardware too.
A lot of these are actually construction, physical activities.
------------------------------------------
VB: None in the green have any, there’s no stop gap, no shortage;
PC: No.
VB: They have the funds we got plus whatever match they’re offering. They’re fully funded.
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PC: yes. That will result in a fully-funded project.
CR: It would be helpful to know what percentage of these projects are reconnaissance &/or feasibility
study and which ones are construction. That’s another concern I hear from folks, is that what’s the
balance of that. We talked about that and it’s a delicate balance. You want to move new stuff forward
thru the studies but have a majority of the money going for hardware. Is there a way to get a
percentage on that?
PC: Yes, there is, I just ran out of time before the meeting. That’s something we need to do quick.
SH: I think we were looking at 20% studies and 80% construction. The green section is $25 million cap,
if we do all greens then we’re pretty much all construction. Right?
PC: For the green, there are some studies in there.
CR: I still feel comfortable with that rough percentage, but I just was wondering what this one turned
out to be.
PC: My guess is it’s 70 to 80. My ballpark guess for the green funded ones. I think we’re pretty close. I’ll
take a shot at it tonight and we can work more on it.
SH: I think the criticism that you were talking about was really on the caps we put on there, after the
fact. This time we actually put caps on before it went out. Some people adhered to it, so it won’t be a
big surprise this time. We haven’t got to the spreading part yet.
PC: Regional Spreading-(29:37)
SH: Go back & talk about the white zone and why we didn’t select some of those.
PC: There are about 35 to 40 projects that AEA is not recommending. If any of those catch your eye, I’d
be happy to go into the db and pull up write up and reasons why AEA doesn’t feel they’re ready for
funding.
SH: They will go on the web site with all reasons right?
PC: We’ll be sending as a courtesy, letters out to the applicants, of course, they’re subject to appeal.
VB: Will you actually explain what the reasoning is on each.
No. 403, Delta Junction Wood Boiler. AEA’s comments are: “Applicant is proposing for a wood pellet
boiler system to heat the Div of Forestry main office proposed addition and whse shop maint facility,
funding would provide design & construction for the boiler building, two wood pellet boilers and pellet
storage. Given the high project cost of $932,000 and a relatively small amount of fuel oil, displays
projects of economics are poor. Recommend no funding.”
In this case, we are not recommending funding because the economics are not going past the red phase
test.
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# 482, Turnagain Arm Tidal Electric Generation Project. AEA’s comments: “Applicant proposes RE
Fund grant of $4 million to assess feasibility in constructing a 2,000 mw tidal flow generator at the
mouth of Turnagain Arm. The project would include three arrays of vertical access turbines and
submarine interties connecting to Pt. Possession on the Kenai and Pt. Campbell in Anchorage. AEA has
the following concerns: Applicant proposes to deploy 210 mw turbines from Blue Energy Canada,
currently Blue Energy’s technology is pre-commercial. Blue Energy itself is proposing for the RE Fund to
develop a 375 KW pilot project to test the technology near Angoon. According to the joint AEA/EPRI
Railbelt Utility, upper Cook Inlet has recoverable output of 17 mw; substantially less than the output
project projected here. At $2.5 billion the project has an extremely high capital cost. Applicant
indicates a Chinese firm will finance $500 million. The applicant proposes to use $200,000 of RE Fund
dollars to prepare an application to USDOE to finance the remaining portion of the project. Applicant
requests $4 million on a low cost energy area that is capped at a maximum of $2 million; so no funding
recommended.
Chris: There’s so many projects here. I’m personally interested in learning a lot about all of these
projects more than this sheet has. How can I access that info.
PC: Remember in past we came up with a CD that had all of the info on it. We just haven’t had time to
prepare that CD yet. That would be part of the submittal to the Legislature by Jan. 29th.
Chris: Even if I could read a paragraph on each project, it would make me feel a lot better about the list
than just looking at the list and a bunch of numbers. Feel comfortable recommending projects I know
more about.
#438, Yerrick Creek Hydro.
PC: AEA comments are fairly stand alone. “AT&T proposes permitting and final construction design
construction on 2 MW run of river hydro at Yerrick to serve the communities of Tok to Tetlin. Permitting
& final design will be completed in Spring 2010. Before funding would be available from the current
round of RE funding, the project would result in 20 miles of pre-phased transmission. AT&T has received
the total of $1.75 from the Denali Commission & RUS that will cover final design permitting and a
portion of construction if AT&T receives $4 million in RD 3, RE Fund support, they will still need to find
financing for the remaining $8.725. AT&T is also requesting $4.5 million for construction of a wood-fired
power system that would throw the same grid. Similar to Yerrick AT&T plans to complete final design
before State FY11 begins and Rd 3 funding is available. IF AT&T receives $4 million in Rd 3 fund support,
they’ll still need to find financing for the remaining $16 million. In other words, there’s a wood-fired
power plant that AT&T is proposing in Tok at the same time and that is an issue because these would be
two large renewable projects that would serve the same grid. In Rd 1 AEA recommended against
funding this project because local land owner Tanacross, Inc. indicated unwillingness to provide legal
access to perform field investigations. Over the last year AT&T reached a temporary agreement with
Tanacross to allow field work, however, there remains no permanent agreement with Tanacross to use
their land for the project. Doyon owns subsurface.
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(42:51)
We recommend funding for construction, with provision that no funds are dispersed until At&T provides
evidence of ROW’s and other development rights with Tanacross, Doyon, DNR & other resource owners.
(43:02)
VB: This one shows a total project cost of $14.5 million, you showed in that note that Denali has
committed $1.75. Add the 4, that $5.75. Is there anywhere that shows how the rest of the matches are
offering, where it’s coming from, a good number.
PC: Probably in the application.
Denali Daniels: I have a question about how our funding is reflected?
PC: Butch do you remember that one?
Butch: I don’t.
PC: We’d have to go it the detail of it.
Chris: In this particular example we’re talking about not disbursing money until this contingency is met,
that is, ROW agreements, etc. How long do you give them to get that; how long do we give any of these
projects before we say we’re taking the funding back, because you’ve been in the que, trying to get your
grant agreement going for 18 months…. I meant to check the regs to see whether that had gotten into
the regs before I came here…That’s a policy that has to be set, cause I think that’s also a question
legislators will have is how long do you give a project. I know it’s a case by case thing, but at some point
there has to be an iron clad deadline.
PC: That’s a project management issue and for this particular project and Doug maybe you can help
remember since you scored it, we probably discounted the technical feasibility somewhat and the score
for that because there was a question about how long it was going to take for the ROW to get in place.
Last year we’d heard from Tanacross that they weren’t interested in giving any ROW to Tok so we
recommended against funding it. This year there was indication from Tanacross they’re ready to go
ahead with it, good match from Denali Commission & RUS so it seems like a good one to move forward.
If a project’s hung up for a year, think that’s a reasonable amount of time to get…
SH: After a year it’s up for reappropration. So if you’ve done nothing for a yr that’s an issue. If we
actually issue the grant and have milestones, at some point we realize they’re dead then we can’t
reappropriate …we need to have a drop dead date. A year for Rd 1. We have to keep them from
building up a war chest whereas every year they’ll keep applying for more and more money…that wasn’t
the purpose of this program. We want to see action & get stuff on the ground.
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Wyn: This is similar to FERC in the preliminary permit thing trying to move things forward showing you
have to make progress, I wanted to bring out something I see happening by how this grant program
mixes with FERC and it doesn’t necessarily change the ranking, but you should be aware of what the
ramification is, there are certain companies here to try to advance their ranking will apply to FERC for a
preliminary project permit on an area like the Turnagain Arm one, I don’t know if they applied or not,
but you can get someone applying it, it can be for a fairly substantial area, they can lock up all of
Turnagain Arm, and that locks it up for 3 yrs so that means no other project can get a FERC permit in
there, nobody can do a project, if we turn around and deny them, even tho basically the grant was the
part they thought they might be able to move forward, then we deny them, then the permit still locks
up the area for another 3 yrs unless FERC takes an action when the company doesn’t move forward
enough and takes away their permit. Permit wise you should be aware that by certain ones either
getting funding or not getting funding, we may stagnate an area for future other projects cause why
would somebody apply for grant funding if they can’t get their preliminary project from FERC. An
implication you should be aware of.
VB: On some of these it shows AK. Power & Telephone Company, some it says Alaska Power Company,
are there two entities there?
PC: APC is a subsidiary of APTC.
Denali: I don’t know how many of these have Denali Comm funding, been trying to pull up that match in
my DB but have been unsuccessful. Is there a way between now and tomorrow where you can I can
huddle I can verify the DC matches. My experience has been they’re not always accurate and reflected
and I think I know why I can’t pull this up. Want to make sure it’s accurate.
PC: Butch is probably the guy.
Butch: We’ll get together after the meeting.
Chris: On this same issue, Yerrick Creek Project. They have a 6 for readiness. Assume they still have
those points cause of other readiness factors, besides the fact they don’t really have a permit, ROW
agreement.
PC: Yes. They have completed feasibility stages. That’s a big deal when you compare this project to any
of others. We’ve been trying to emphasize orderly progression of projects. Reconnaissance to feasibility
to final design & construction. It seems that’s generally beginning to take. For many of the partially
funded projects, 3rd to last column, you’ll see partial funding and that’s often because they’re asking for
2 or 3 stages and will be done with one stage at end of summer, so our feeling is ok, do that stage and
come back to the RE Fund afterwards and compete.
Chris: Basically if you were to award money for that project that you just described, you would write a
grant agreement that readjusted the project and said the project is this stage, it’s not the other two
stages and…
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PC: That’s right. That’s reflected in our recommendations; it says partial funding for this, and you can
see this one in the pdf sent to you.
Chris: so when you say it’s taking, you mean applicants are starting to get the fact you’re asking them to
apply in an orderly fashion.
PC: Right. Don’t ask for 4 yrs of funding. Ask for one year of funding that you can get moving on a
project. Chairman, if I can just make the case that it is good to fund a lot of non-construction, because
that brings projects forward, otherwise we’d be looking at in year two or year 3 a sudden dryness, in
construction projects unless there’s other funding.
Chris: So you still think the 20% roughly of studies and pre-const phases is a good number?
PC: yes.
Chris: Enough to keep enough projects going?
PC: Yes.
SH: Does anyone want to look at any projects in the white area, the not recommendeds? Wonder why
they got thrown out? Want to make sure you have a good foundation, as to what we were thinking even
before we started ranking.
Chris: Curious about #487, Kwig Flywheel project, in the not recommended section. I thought I saw that
another flywheel project had been recommended…..
PC; Of 4 flywheels, there were some in recommended. I could read this, maybe executive summary
would be better.
There were 3 or 4 flywheel projects using the same technology that were proposed. James checked the
Homer optimization model on them and the economics didn’t appear overwhelmingly good. It did
make sense, since there are no flywheel projects in the State of Alaska associated with wind projects, to
at least recommend one to be tested. We recommended the highest ranked project for other reasons;
the highest B/C ratio, right James? Konig…
James: Kwig & Tuntatuliak were not.
Chris: this bring up another thing I would be looking for when reading through this, is somebody might
be able to make the case that the project you just described is more of a demo project even tho it’s
commercial technology and I can see either argument. The question I would have is how many other
projects that got recommended might fall under that category where somebody could argue this is a
demo project?
PC: My feeling is maybe 10%.
SH: The question you’re asking is, is this flywheel technology an emerging technology? I’d say no.
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Chris; No I don’t think it is.
SH: The integration of it is definitely new ground.
Chris: New ground. So that’s what makes it a demo project & that’s a very nuance difference that I just
want to know what those projects are. So if people ask me about them, I can well, the reason that it was
funded is because: x, y and z. If we have the time rather than waiting to read about it like to know from
you now on that list which are the ones that you think are in that category.
PC: That have demonstrations? Want to start with that?
Chris: Sure.
Point out the ones demonstrating a principle or something?
Chris: Even a technology. In this example it’s not the technology, it’s integration.
PC: Often what it will be is a new-ish technology that has not been applied.
Denali D: Peter you are on the review committee for emerging technologies and I think most of us know
that one of the big dilemmas is articulating to legislature the distinction between emerging technologies
and the renewable energy program so as the reviewers were going through how is that contemplated. I
think it’s really important for us to know.
SH: the legislature was pretty blunt when they asked me how many failures do you expect. What’s your
acceptable limit for failures, the answer is zero. When you make that kind of answer you’re not going to
be looking at a lot of emerging technologies. This really is not, it’s not let’s play with some money and if
it fails what the heck.
Denali: I want to make sure that we don’t have a few emerging technologies slip by here so that then
there creates confusion as we’re trying to move forward with the emerging technologies initiative.
(58:36)
VB: That’s one of the things w/our energy program for renewable stuff we decided to emphasize was
the emerging stuff because this one’s not supposedly looking at emerging technology but already tried
technology.
SH: Let’s go down the list & look at anything that’s emerging technology, you won’t find many; new
application or something. Don’t think we have any leading edge technology at all.
PC: There were some projects that were turned down that certainly do.
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Chris: I understand what Denali is saying, unless the state actually develops its own emerging technology
fund which we hope will happen this spring, I’m still ok with some of this going there, but I want to know
what the projects are, by project by project basis.
PC: I think that’s been our thought here. If there is no emerging technology funds, and there hasn’t been
for RDs 1 thru 3, then we don’t want to throw the baby out with the bath water when there’s a fairly
decent chance of that.
[discussion on emerging technology]
Denali: Is it phase one we’re funding tho. So could there be somewhat of a sequential argument to
refund the first piece and then it’s ready for primetime at AEA…or is that a stretch?
PC: What we’re saying is that Denali Comm is paying for some of it like the first pump and the AEA
would pay for the second. So it is pretty much serial.
VB: So we’re paying for the emerging part –
Denali: Emerging meaning we’re sticking our neck out first.
PC: Another way to look at it is that it’s a spectrum of demonstration and emerging technology, so to
the extent that it’s bought down by emerging technology funds and the rest is covered by operational
funding, that might be one justification.
Chris: I see a big distinction between applying an already proven technology like this and trying a new
technology. That’s why this is helpful to go through the list. Ft. Yukon is an application, it’s not new
technology, it’s not uncommercial technology.
Denali: Maybe one got by on our end. I think it goes both way.
SH: I think it’s kind of a gray area.
Denali: I think it’s going to be an issue with the legislature. So we’re going to have to get our story
straight.
PC: The emerging technology fund that Denali Comm does not have the strict eligibility requirements for
the proposer. There are other little wrinkles here that a private company that doesn’t want to make
power would not be able to apply to this. But could apply to Denali Comm to show a technology.
The following funded projects identified as somewhat and emerging technology projects:
Somewhat:
• Atka Hydro Dispatched Excess Electrical Power.
Using changes in both frequency, dispatched hydro and remote locations.
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• Kotzebue Electric Assn High Penetration Wind-Battery-Diesel Hybrid.
The turbines probably would not be but it would be for battery.
• District Wood Heating in Fort Yukon.
Has very significant demonstration value, though not the technology, more of a system
demonstration - an application of wood fired heating.
• Alaska Sealife Center Phase II Seawater Heat Pump Project
First water source heat pump demonstration in the state.
• Chefornak Wind Turbine Installation – electric boilers at remote locations.
[1:17:50]
Chris: seemed like there were 3 that were actually demonstrating technology. Rest are technology
that exists, just the application. Would really only find 3 that I would see would be perfect for the
emerging tech fund. We don’t have one which is why you’re suggesting….
Emerging Techology:
• Kongiganak Flywheel Energy Storage
• Cook Inlet Tidal Generation Project
• Solar-Thermal Collection & Storage – Developed in Scandinavia and demonstrated in Alaska.
• Kachemak Bay Tidal Power (this project would look at the resource availability in a particular
area. More site specific.
• Port Frederick Tidal Power – Recon & feasibility for developing a 400 KW two basin tidal energy
project. High permitting risk, recon & feasibility. Habitat impact, FWS impact assessments.
• Yakutat Wave Energy Pilot Demo – Final design. 650 KW, detailed civil, mechanical and
electrical design; strong project team.
1:13: 21]
VB: Asked Brad if he was still on phone and what his availability would be for tomorrow meeting if
we met tomorrow.
Brad: Should be fine with things. Has a 9:00 appt. I have one question to ask of Peter:
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Did it seem like some of the small village folks were able to come up with some reasonable match
funds and what were the sources. Did it seem like we were getting the right kind of involvement of
the small villages in the process? We should take a look at some of the projects on a more specific
basis to see where the funding’s coming from to bolster the efforts of the small folks. Has to sign off
now.
PC: It’s hard for me to assess that right off the cuff, I’m not really sure. Will definitely do that.
• City of Kotzebue Biomass Tactical Garbage to Energy Refinery – High risk.
• Angoon Commercial Demonstration Tidal Power Project -
7). Geographic (Regional) Spreading (1:19:18)
PC: There were a number of regions that do not have any projects that would be recommended for
funding w/in the $25 million constraint.
One is Bristol Bay. Although Bristol Bay does show one project, that’s the hydro project. This
recommendation was to reallocate funds for Rd 1. This really isn’t a project using Rd3 funds.
Another is Lower Yukon & Kuskokwim. Definitely different than before. No green projects.
North Slope also no green projects.
Chris: The concern that you’re bringing up is that if we were to say we’re going to try to figure out how
to do the regional spreading with only $25 million then there’s an issue. But if we looked at it at $50
million there’s less of an issue.
PC: we haven’t assessed the impacts of going up to $50 million. The regional summary is just based on
$25 million. But yes that would likely spread out the impact. We’re only recommending 18 or 19
projects then of course it’s going to be lumpy. The allocation is going to be lumpy among 11 regions.
SH: This is based on rank alone. Now you have to go out and spread them based on some of the criteria.
Chris: Since the legislature committed $50 million a year, even tho the Gov only put $25 million in the
budget, I would suggest that we spread it assuming we’re going to get $50 (million).
SH: What we did last year, when there was $50 million in the Gov’s budget then the Legis asked us to
look at $25 we gave them a dual recommendation. We gave them a green for $25 and yellow for $50. I
agree we make two levels of recommendation; statutorily we were told to make a recommendation for
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$50 million; supervisorial we were told by the Gov under this budget to look for $25. We’re going to
give you two numbers.
Regional Summary Sheet: (1:23:24)
PC: Refer to Region summary sheet. Top of this sheet just looks at Rd 3. Recommendation is in green,
total funding by energy region. The percentage is just a percentage of the total, which totals $24.38
million, any more allocations would go over the $25 million limit. We didn’t try to break projects up. If
you remember a protocol we established in Rds 1 and 2 were that a project would need to get at least
50% of the prorated by cost of energy allocation. These are new energy costs in the region. Based on
the latest data we have, the average cost of power w/in each of the 11 regions. If we allocate this
$24.38 million according to the relative magnitude of these numbers, this is the number we get. What
we established before in Rd 1 and 2 was that each region should get at least half of that number. The
numbers in Bristol Bay half of the 2.25 million is 1.262 million, there was no allocation this year so this is
the additional amount we would need to recommend funding in Bristol Bay in order to achieve that
allocation.
Kodiak is short. The negative numbers mean they are in good shape along that criteria. So we are a little
short in Kodiak.
Short in Lower Yukon Kuskokwim and the North Slope. This is only considering Rd 3. If you looked at
cumulatively what and go down to the table below, there has been for a lot of funding that has been
allocated in the Lower Yukon Kuskokwim already. If you total the allocation among Rds 1 thru 3, then
you get different impacts. The only regions that are short in this case are Bristol Bay and the North
Slope. All the rest of them have positive numbers. That is something for the committee to give us
direction on.
Butch; There were no applications in Rd 1 for the NS Region. That impacts that one somewhat.
Chris: If we did decide to do it that way, we really would only have to come up with another $3.6 million
in allocations. $2 for Bristol Bay and $1.6 for the North Slope. Then we could say by even suggesting that
the Legislature comes up with at least $28.6 million we say well we could say we would be able to meet
the protocol we’ve established in terms of geographical spreading, with only another $3.6 million.
PC: Back to the overall ranking list, we could start if we needed to find, and we were just going to have
$25 million in funds, then we would start at the bottom of the list and grab that $3.7 million taking it
from the projects that are lowest ranked (in green) and those would be Neck Lake Hydro, City of Craig’s
biomass fuel dryer, City of Akutan’s hydro system repair and upgrade. The Aleutians and SE are in
pretty good shape. I’d have to see what that would do to the, yeah, the Aleutians would still be ok, as
would SE. That would be how we would geographically spread if we did it the other way around.
Chris: I feel like it’s almost impossible to say we’re not going to give you the $50 million and we want
you to go ahead and do the geographic spreading. I would much rather proceed on the assumption that
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they’re going to come up with the money that they committed, $50 million and here’s the numbers. If
you go right down the list in terms of order of rank, these are the numbers. And if they did all $50
million, then all of these regions would get their at least 50%. My perspective is they come up with $50
million and we recommend $50 (million) to the projects then the geographic spreading has taken care of
itself really because there’s enough projects from each region.
PC: I could make that assessment. I could revise this sheet and make another one. An extra column.
VB: And right now you’re only taking into consideration on the top one that the first 25.
SH: So let’s do another sheet, yellow sheet that will show $50 million, making sure we’re covering both
bases. At some point if they just do $25 (million) we still have to give them a number that’s still
regionally spread on the $25 (million). My concern is when you go like North Slope if they have any good
projects you’re going to force the yellow projects to become green.
Chris: The Legis is going to make the decision on which projects get the money in the final analysis
anyway. I would prefer not to tell them just take the one that’s the lowest rank out of the 19 projects,
the first $25 million, and just have a narrative in there that says, look if we’re only going to get $25
million then there’s no way we can do regional spreading and meet this protocol unless we have
another $3.6 million and just explain to them how it would work. Because ultimately they’re the ones
who are going to decide. They can see the ranking and they could choose then to say we’ll take the 19th
project.
VB: for the NS there’s only one project that’s in the yellow and it’s at the very bottom, it’s only
$132,000, it’s not going to change significantly.
PC: yes we can go down to the yellow to fill it in to $25 million. Is that what you’re saying.
Two yellows, one brown . All 3 are same amount $132,000. Brown vs. yellow?
PC: those are wind feasibilities.
VB: So in each of those only $132,000. So two yellow and brown would total almost $400,000.
PC: Are we assuming cumulative what our target is or are we going to assume that it’s the only
allocation each Rd stands on its own.
Chris: If we do cumulative and it’s only $1.6 million more for the NS, there’s no way to fill that. If I had
$61 million, I would just say let’s do the $61 million, probably most of these project should do
something for the state. My concern is simply we explain to the Legis what we’ve done and they can
take responsibility for however they want to do it, but if we try to reach this regional spreading by giving
the NS another $500,000, these 3 projects, and that includes a brown project, well, if the Legis wants to
fund it, knowing it’s a brown project, then they’ve done that, I don’t think it’s our responsibility to say
anymore to say well we’re the ones who recommended the brown project. They’re the ones..
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SH: Ultimately they’ll make the appropriation and finalize the list. The first list was our list and after that
it became their list.
Chris: This is all because of the regional spreading language which is inherent conflict with other
statutory mandates. We’re doing the best we can by suggesting how we can get to this protocol we’ve
established.
PC: one thing to keep in mind. We would only not recommend projects if we thought they had fatal
flaws. Some of these tan projects may not necessarily be the greatest project to go ahead. Our best
assessment of the inherent merits of a project are under this total stage 2 score, the technical &
economic review. It does not take into account the cost of energy and match nor sustainability. There
may be good reasons for not going too far down the list too.
[1:15 pm Bill signs off to go to lunch – will call Peter with his issues.] (1:35:24)
Chris: There’s also the kind of project. I’m way more comfortable in giving $132,000 to a brown
feasibility recon project that’s going to at least settle it once and for all, you’ve got a wind resource or
you don’t than a Stage 2 or 3 project that’s brown, then you might be spending money and not learning
anything. At least you’re learning something with a recon study. It might be you don’t have any wind
but it’s settled then.
PC: two things I need to do…Staff at AEA needs to do:
• Allocate between construction & pre construction and
• Go through and make another regional allocation summary that includes the full $50 million
(the yellow)
SH: So we’re going to go thru and spread the green on the table here, add all 3 of those to the NS, that’s
all the application they have, what are we going to take off the list.
Chris: We don’t have to take off anything. We’re at $24, 383. We’re still under.
PC: That would not take care of Bristol Bay. Bristol Bay their next one that comes into the solution, is
New Stuyahok and Pilot Point. Those would get bumped up. $1.5 million; to end up being $26 million,
then we would go down to the bottom of the green and take some away in order to get to the..that
would be Neck Lake Hydro, $90,000. We’d dip into the bottom 3 green ones in order to reallocate a
couple of yellow ones for Bristol Bay.
Chris; I guess that’s the way you would do it if you wanted to provide them with a list that’s $25 million
and reaching this protocol based on a statutory thing that I don’t think had a lot of, that’s impossible to
meet, I think . My biggest concern is simply that the narrative that goes along with this is clear and
succinct and explains what we were doing and they can accept or reject that reasoning.
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PC: If we accept the cost of power allocation which is a little different to explain sometimes, but I think
we’ve used in the past, I don’t think it would be difficult to explain what we’re doing. It’s pretty close if
we assume the cumulative Rds 1 thru 3.
Chris: Yes and point out that the committee thought that cumulatively was the best way to assess it.
PC: Our staff will hit this stuff and turn it around by tomorrow morning. Shouldn’t be too big a deal.
VB: What about the part that Chris was asking about, the comments he wanted. Are you getting those
to?
PC I think we can do that.
Chris: A lot of those questions have been answered just by going thru the list and seeing which ones
were what. Just project description & comments for each one of them.
PC: Chris R is good at this and we’ll see if he’s available.
Chris: What’s the approach for not only getting this info for Rd 3 for the Legis, but are they expecting an
update on Rds 1 and 2. I think they kinda are. How’s that going to go?
PC: We have just been busy on this, we can certainly do that.
Butch: Sen Hoffman requested something last week tied to another issue. We did put a report together,
Chris, on Rds 1 and 2 and I was ready to share that with you. That was part of the packet of info that
went out.
PC: I guess what I’m most interested in doing, and we started doing, is just showing pictures of the
projects, what are the latest pictures we have, what’s happening there, what equipment’s there and to
me that’s a lot more interesting than the grant stuff. I think our emphasis is on that. That takes awhile
though. All of our PM’s have been busting hard to get this stuff done. We are staffed up a little bit
better, it would be nice to have a month before we march down there and gave a presentation of some
sort.
Chris; I don’t think there’s any rush. Just kind of curious if you’ve been in contact with anybody about
doing that, or.
SH: This report went down to Sen. Hoffman. I also prefer the picture approach that we showed you. The
presentation we did to LB&A. Spruce up to show & put it in context to show here’s the cost, here’s what
the AEA component was, here’s the funding sources and here’s how many gallons we saved, kind of put
it in context a lot better.
Chris: I agree, I like those slides.
SH: It goes pretty fast. It’s hard to get pictures of a feasibility study!
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VB: Let’s break; there’s lunch ready in the next room, let’s take a few minutes to grab food and get back.
[Lunch break taken at 11:47 am] ??
12:14 pm, meeting called back to order.
8.) RE Fund Report rounds I and II:
Butch White:
Chris Rose and I talked a little bit and I’m going to take a stab at putting this information I’m going to
give you in a more narrative form. Right now there was in your packet a spreadsheet that was prepared
at the request of Sen. Hoffman’s office, and Sara suggested and we did share it with other members of
the LB&A.
There’s 109 projects funded for $125 million. We have obligated (got grants out the door) for $67.3
million and actually dispersed $18 million to applicants. Of 109 projects, 75 are in place, 21 are in house
(we’re working on them, everything from the PM has got his negotiating points or on internal review
involves myself, the PM, the Controller). We’re waiting for information from the Grantees on 13
projects. Remember in Rd 1 there was a couple of projects that were hung up just because we capped
them. And that was one of the pieces of info you’d asked for at the last meeting, that’s also in your
packet, a summary of those particular projects that got capped. That’s where we’re at in Rd 1, any
questions.
Chris: Can you tell me generally, or specific examples of why there have been, what kinds of issues are
being negotiated in these grant agreements? I know that some of these grant agreements have not
been fully negotiated. I’m trying to figure out whether there was a trend. What are certain kinds of
issues that come up?
Butch: Funding is a lot of it. Especially if we had only given them a partial grant and the milestone and
projects they proposed went out this far and we only gave them this much money, we’d have to work
on what are they going to do within the scope of the original grant that was approved by the REFAC and
AEA. That’s one thing that’s going on.
Chris: So that gets to the issue of capping.
SH: Milestones.
Chris: But also the capping that we’ve done.
Butch: Another issue is we’re ramped up now. It’s been a long process. This started in 2008 so it’s been
time. Some projects for whatever reason we just haven’t got to it yet and the Grantee has said yes we
can wait for now.
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SH: Some of the issues are IPPs and what the rate can be so that whole cost-based rate, that takes us a
long time to wade through that. I think we have an answer now. We worked with the RCA. It’s a
complex issue. Most of the conversations we’ve had are about IPP’s as opposed to the utility equal. It’s
a different role for them. We have milestone issues. We have making sure that they hit the milestone
and have the right reporting and right purpose. I think we’re put in a weird position to make sure we
have no failures. We are doing things above and beyond to make sure there’s no failures. We know
there’s people out there that would like to see us…It’s nothing we’re doing, they don’t like the program
or where the money’s going in the program so they want to find something wrong. We have to
withstand a very high level of scrutiny. Higher than anybody else.
Chris: I’m trying to get answers for when I’m asked questions.
Sara: This is an evolving process and we’ve addressed some of the issues that came up in Rd 1 and 2 in
the difficulty in getting the grants out. The application was actually formatted in a manner that for Rd 3
we’re getting a lot of additional information up front from the applicants. So if they’re a successful
Grantee…which this morning we mapped out what our schedule will be for this list going to the
Legislature, assuming we have an effective date of July 1 for this money to be available, that from
February until the effective date of the appropriation, internally we’ll be working on all this stuff. Once
the money is available the grants go out the door. We will be doing all that work up front. We’ve finally
caught up that we’re able to do that proactively. Plus we have the staff to do it.
Chris: That’s an example of the kind of thing I thought when I was talking to Butch earlier during the
break, will be good to put into a short narrative so legislators can we how the program has progressed
and developed because it is a brand new program and you are making it a lot smoother over time, but I
think that it’s good for the legislators to be able to read that in a two or three page document. Like “On
this issue, we’ve done this, and now we’re doing this, because it’s much more efficient…or whatever.”
PC: If we could get to web-based reports so that, as the Denali Comm does, if someone’s interested in a
particular area, they can drill down and look at it and even pull up a quarterly report for a certain
project.
Chris: Yes, I just think that for the report on Rds 1 and 2 it would be nice to have a 2-3 page narrative
beyond the spreadsheet because there’s a lot of people that are not going to look at the spreadsheet
very closely. They’re not just trained to figure out what it means. But if you’ve got 3 or 4 pages of
narrative, I think it would really help.
Chris: As you know, the legislator is considering changes to this bill, this program. That’s in the Omnibus
Energy Bill. There’ve been people w/in REAP (Rural Energy Alaska Project) and the policy committee on
the board who have also suggested that there might be tweaks. So what we’ve decided at the policy
committee level is to have a discussion about what we might be able to suggest as changes, then come
to you guys first before we make any of those kinds of suggestions to the legislature and see what you
think. I think there’s an active group of people w/in REAP who would like to be part of the process
rather than the sidelines, because they see that the legislature is going to do something anyway. I just
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wanted to let you guys know that that’s something that’s recently come up. On January 29th we’ll have a
policy committee meeting over at APA at 10 so you guys are more than welcome to come, two weeks
from Friday, just to have that discussion. Because we’re not even sure what specifically it might be, we
just want to have that discussion.
SH: We keep looking at the process and everytime we stub our toe we try to figure ways to not do it
next time.
Chris: That’s just my point is that if the Legislature understands that progression is being made, that
will go a long way to allay their concerns about anything.
SH: One example is on the caps and the problem it caused on Rd 1 this time it wasn’t even part of the
discussion because it was part of the application that said: assume this cap’s here and it kind of a
eliminated the request and everything went forward. We’re trying to learn from past experience. The
other thing we’d like to do is actually send out a letter to all the people in the process and ask them how
it worked for them. I’d like to do that sooner than later but not before this process is done. For them to
send us feedback, we think we’re doing something to improve it, and they may view it as a negative.
Chris: That brings up one issue that’s been discussed. I don’t know what your feedback is on some of the
applications that have been rejected on their face, whether or not they were rejected because you could
tell that whoever wrote it, the applicant really didn’t have the capacity to write a good grant proposal or
was it because it was just a bad idea, I’m sure there’s some of both. But the concern that’s come up
within REAP and has been discussed is there’s certainly more capacity building that needs to be done in
the villages in these communities to get them to the point where they can write grant proposals. I don’t
know if that’s AEA’s job, Denali Comm’s job, don’t know who’s job it is, but it’s an issue. Everybody
wants to build capacity in the communities. That’s part of the concern I’m hearing from some people,
like well why doesn’t Bristol Bay or NS got more applications in? It’s not because they have less of a
need at all.
PC: Chris, AEA has had programs in place for years now. Now we’re seeing a lot of need. The wind
energy program is one you’re familiar with. An important function of those programs is to help develop
projects. And obviously we have 10 staff now in alternative and energy efficiency that’s not going to go
too far statewide, but at least there are people at a level of expertise that can work with the Denali
comm., regional entities, university, etc. to bring some sort of focus on that. In terms of implementing
the Alaska Energy Plan, that gets into that area. There needs to actually be programs set up or existing
programs need to focus on developing projects. We have in our Energy Plan we have a number of
possibilities, optimized choices for each community. Let’s get to work on those. Let’s actually start
developing those. That should bear fruit in term s of projects for the RE Fund.
SH: We try to evaluate that when we do evaluations. What we don’t want to see is a very good grant
writer with nobody behind him to back it up. You don’t want to look for the perfectly written grant from
the community and you don’t have anybody there to make it real. There you’ll have failures.
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Chris: That’s more of a concern than the capacity to write the grant, is the capacity to follow through
with the project.
SH: You need to find the people with the passion to make it real. When you look at those look at other
things, the successes in the past, etc.
Chris: What I’m hearing is that the more weight that gets the better, everybody thinks that’s a pretty
important thing is the capacity of the community to really follow through. That’s part of the
sustainability score, part of the community support score, part of the readiness score probably, but I
think it’s a very specific topic that keeps coming up.
PC: For projects that failed Rd 1 we tried to be pretty tight as to why we felt they shouldn’t go forward.
If there just wasn’t enough there to really assess that was the problem. It’s not been so much a matter
of the sophistication of the proposer, I think we’ve tried to be as fair as we possibly could.
Chris: This ideal is either good or bad.
Sara: One of the things to remember to on AEA is this program has really been designed on a cost
reimbursable grant management process where the Grantee receives the funds and builds the project.
There is another project management model that AEA runs also thru the Denali Comm and it’s where
AEA manages a project for the community. We still go through sustainability criteria requirements. All
of the bulk fuel tanks farms and any RPSU projects that have been built thru AEA have been AEA
managed projects, so we wear two hats – we’re receiving money from the Denali Comm, but we’re also
managing the project on behalf of the community and we turn over a completed project. We do have
the option for these programs and these projects. If necessary we can step in and provide that level of
support to communities and I think that was an option that they could request. I don’t think we’ve had
very many, but we have had a couple of projects that we have managed more in our traditional, almost
construction management model. It provides a level of support that’s necessary, some of it is just
financial support to be able to, procurement and accounting process. A community may be perfectly
capable of managing a built project, they just can’t get it built with the existing infrastructure, usually
financial resources in the community.
Chris: I think that’s a really good point to again communicate to the legislature because I’ve talked to
people recently that had no idea that this was a cost-reimbursable program. Those same people
probably don’t know that there’s the option that it might not be. Even a paragraph that shows this is
how most of these are being managed, on the other hand AEA also wears this other hat in certain cases,
and this is an option we’ve given people. That’s a really important piece of information.
Jay Whibey?? (Sen. Hoffman’s office): I was listening to the conversations regarding the allocations in
Rd 1 and then the cumulative allocations in Rds 1 thru 3 and I think the Senator will probably be
interested in looking at that and the issue of whether or not the allocation was meant to apply to rounds
cumulatively. I can’t speak for the Senator on that, but I know that will be an issue for them. My other
question is when looking at the spreadsheet and maybe you’re getting to that, when you look at the
22
cumulative grants rounds 1 thru 3 and you see the regional allocations and grant allocations. Do those
allocations change based on whether the allocation can actually be spent or whether it’s been rescinded
or whether there’s been some judgment on the part of AEA or someone else that that money can’t be
spent. In other words, the allocation seems to be in some ways based on how much work’s actually
done on the ground and how much work has actually been accomplished as opposed to how much
money is allocated.
Chris: Another way to ask that and correct me if I’m wrong, is, how much of that money that’s in that
column that says you know that’s been allocated is “certain.” Either by as you said it’s actually been
spent, or AEA is certain that the project’s moving forward.
PC: I take your point. It does seem that the allocation has been made now if it has been adjusted then
and some of these have, because projects have changed and we’ll get into that in a moment. So we
could revise the table, but I think for all projects that whether the allocation is going to remain then it is
an allocation and over the next year or two the money will be spent. We could look at the amount that
has been spent to date, but for all projects that we have budgeted after this initial adjustment period, I
think our assumption is that the projects are going to be going forward.
Hoffman’s Office: So the allocations are going to be the same, even tho the money hasn’t been spent
yet.
PC: yes, in discussion are things like the Nome project which just has not progressed. That’s $4 million
that is not moving. That would be of concern, something we should at least address. There are a
number of other projects which we will get into that we de-obligated the funds because we know the
projects are not moving forward and we can adjust the spreadsheets for that reason.
Hoffman’s office: That answers my question.
SH: Right now we’re basing that on appropriations the legislature has already made.
PC: Yes.
Butch: Two examples came to mind for Chris as we were talking. One was Napaskiak, in Rd 1 their
application was one of those that you wanted to move forward but there just wasn’t enough there. But
they went out and they had somebody help them, they didn’t get into the green but they’re at least into
the yellow this time and they scored, they did good. On the flip side of the point that Sara was making,
we had one Grantee that we thought seriously should be an AEA managed project, past experience told
us that, they felt as though, no we want to build our reputation so they argued long and hard and won
the argument. They’re running the grant themselves. Granted, we’re advancing them money, but
they’re doing it themselves. It made me feel we’re doing good there.
Chris: This brings up the issue of how well known it is to anybody where this help and building capacity
is. Because the Denali Comm is doing some of that, AEA is obviously doing some of that, I just think it
would be helpful for everybody, not just the Legislature to kind of understand where that is, so the
23
people know that it exists and they can ask for the help when they need it and it also makes me wonder,
I’m assuming you looked at the Denali Comm’s sustainability criteria, and that’s essentially part of the
criteria we’ve been using when you’re looking at project readiness and community support and stuff like
that.
That permeates AEA’s way of doing business.
Chris; as long as you can say to somebody who asks….this project is sustainable because…I’m more
concerned about whether the community can operate and maintain the project. I know you guys are
looking at that.
PC: When we look at the sustainability score, that’s a very very broad category, but our rule of thumb is
that well in 15 yrs if this project is developed what do you think of the likelihood is it’s going to be up
and running. That integrates a number of factors, is the community going to be there, is there going to
be substantial Fish & Wildlife habitat impacts or operational complexity. Does the community have the
ability to do it and of course is the community there. From a technical side of things, is there going to be
a load or a market for the energy that this will make.
SH: a lot of times it boils down to one person.
Chris: I know it does. And if that one person goes then all of a sudden you don’t have a sustainable
project and I don’t know how you build an assessment of that into this, but I think it’s kind of important,
if you know that a project, even though it’s a great project, is dependent on one or two people who may
or may not be there in a year or two, I think that’s pretty risky. It is hard to quantify. And you’ll probably
get a new argument if you said we’re not going to do this because….but it’s still reality.
VB: So right now we have 5 points.
PC: when you look at the scores here, 5 points makes a difference. In terms of listing why we’re not
documenting except the text of the AEA write-up why we think a project ought to move ahead or not,
the sustainability is not necessarily documented in any certain way. I don’t know if that’s something
that you guys will want to see.
Chris: I think it’s something I’m hearing legislators would like to see. That’s why I’m saying if it’s not a
criteria, then, that would be worth a paragraph or two in a narrative, where you answer people’s
questions before they ask them. You answer anybody’s question about is this sustainable, by saying AEA
assesses sustainability in the following way…it’s part of the following scores. Just so people don’t look at
this and say how do you even know it’s going to be sustainable. If you look at that (chart) it doesn’t help
you. That’s just an example again of the stuff I was telling Butch might be I would suggest might be
worth putting into a short narrative. That’s a big question I keep hearing, is well what about we’re going
to put money into projects that aren’t going to be there in five years and I go I don’t think so. I want to
be able to back that up.
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VB: Do you know if there’s ability to align with Denali Comm criteria in that regard? I know we’ve had a
lot of discussion in the last year cause we had significant decreases in our funding. We’re trying to
prioritize what communities we’re going to do something with, and what we’ve said : “communities
under 100 won’t be considered that had all kinds of blowback because there’s some high functioning
small communities like Igiyoguk, 35 people and it’s a great…I don’t know if there’s anyway to align…
PC: I think what we can do fairly simply is to expand our evaluation guide to talk more about
sustainability and as we’ve done for a couple of benefits assign point scores for different facets, one
could be just that community population has decreased over the last 10 years, we could easily include
that other than point scoring.
Chris: Good idea. It sounds like you’re considering it anyway, but it’s very difficult unless you ask the
question to get a narrative answer to know how you’re doing.
PC: Yes, I think that would be a good thing. It would be nice to have a bit tighter, it’s 5 points, but now 5
points is now becoming a little more important.
9.) Review AEA Proposed Reallocation of Round I and II Funding
(2:29:45)
PC: Think what we’re probably going to talk about what we discussed yesterday and going to ..
SH: To put it in context, Rd 1 – we had to make a list and we went to LB&A and they gave us guidance a
year ago that said if you have project money that goes back or if someone cancels a project, it goes back
to Rd. 1. When we have a couple of projects, 3 or 4 have gone away, and our instructions are to put it in
Rd 1, we’ve exhausted a list of Rd 1 projects we would have recommended so we’re done with that. The
last one was Tagats Lake, we can fully fund the request for Tagats Lake, then the question is what to do
with the rest of the money so we needed to talk to LB&A and get guidance on how to take care of those
extra funds. We don’t have the authority to move them anywhere else other than ask for direction and
on Rd 2 those direct appropriations we don’t have any authority at all to do anything with the money on
Rd 2. Don’t think we have any cancellations on Rd 2 yet.
PC: We do have some revisions we need to make. We had an error of $400,000 too much allocation for
Akutan.
Sara: Steve and I are going to Juneau next week to talk to the legislators and we’re all going to get some
time w/the LB&A Chairman, with respect to this. It was a unique appropriation for that first $100
million. Rd 2 appropriation is really the $25 million if you follow the list it had the March 29 date on it,
which is what we are doing. That is some type of reappropriation language to then direct us to do
something else and it could be more than likely using the money for a future round. Some of this stuff
gets pretty stale. It would be difficult to use an earlier application for a project that would all of a
sudden have funding two years later. There’s just a few kinks to work out with how the money would
cycle into the RE fund not be allocated to specific projects and be available to a potential future project.
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Chris: So that means you guys are probably going to recommend that any Rd 2 money that gets left over
or needs to be reappropriated go to future rounds rather than a past round?
Sara: I think that makes the most sense. There’s also some interest that’s been earned in the REF so
there could be a $25 mill allocation by 2011 plus this additional money that would be reallocated.
Presumably it would have to be in some appropriation language in some appropriation bill.
Chris: So are you asking the advisory committee if we also agree with that? So you can say we do or
don’t?
SH: Yes.
Sara: it makes sense to ask you.
Chris: that’s what I’m thinking and I agree. I personally, one person think that makes sense to ask for
that.
Vb: Two.
Chris; two our of 7. The chair and the vice chair thinks that a good idea.
PC: Should we poll the rest of the committee or maybe we’ll have more people tomorrow?
VB : If we can get 4 people at the same time, get 4 people to say yes. We’re going to be through a lot of
stuff and have most of the major stuff we want to get done and it will probably be necessary to meet
again tomorrow to review it.
Chris: I would feel more comfortable coming back tomorrow for a couple of hours and finalizing our
advice tomorrow. After I had a chance to look at the stuff a little more.
VB: Sen Hoffman & Bill Thomas are going to be in LB&A stuff tomorrow. They won’t be available
tomorrow. If we can get Jim (Posey) we’d have 4 people tomorrow.
PC: Shauna did we hear from Jim to know whether he was coming today or not?
Chris: So on Rd 1 you’re saying we’ve already used all the excess money to fund Rd 1 proposals that had
been recommended and now are you also asking our advice on what you propose to do with the Rd 1
money?
(2:35:32)
PC: Last on the list was Takats Lake and I think there was another one. Assuming there are other
projects that don’t go through, and we need to reallocate, then we’ll tap off the rest of the
recommendations for Rd 1 and there will be money left over. I think that‘s a likelihood scenario, then
what do we do with those funds. So we’ll get with LB&A on that. Should the committee make a…
26
SH: We can make a recommendation, at the end of the day that’s what they want to do with the
money.
Chris: Seems like there’s a few projects we’ve already talked about that were capped in Rd 2 that are
having trouble getting the rest of the money. That might be one group of projects you want to consider
giving the money to. Rd 2 projects that are still good but don’t have enough money.
Sara: I think we’d run into a bit of a problem if we’d made it a decision to cap at $2 million and there’s a
recommendation in the same application to add above those caps. Esp in Rd 3 where we have it in the
RFA. It’s not fair to the other potential applicants that apply. It wouldn’t potentially be fair to others who
manage it some other way, loan or finding match funds from other areas. We have to be careful on that
going above the $482.
Chris: Are there any other projects from Rd 2 that need money who haven’t got the cap yet. Who
haven’t got all the way to 2 or 4? Would any more money made any difference for them or is it only the
projects that got capped? I think you’re right Sara. Maybe stay completely away from Rd 2 and suggest
that it go in the same place that you’re saying just have it all go to future.
SH: LB&A told us to fill up the bucket on Rd 1 then I’m assuming we’re going to recommend everything
left over in Rd 1 after that bucket is full will be to Rd 3.
Chris: Is there any talk among you folks as a kind of logistical procedural point of view. Know we talked
about how nice it would be to have an effective date on these funds to be much earlier than July 1
because we don’t lost have the construction season. Is there any way that we could change this program
around so we’re not always evaluating hundreds of millions of dollars worth of projects before we know
how much money we have?
Sara: It’s a grant recommendation program, it’s designed that way we’re supposed to do this up front
work in order for the Legis to make the decision on what projects they will appropriate money for. It’s
designed that way. I think before the bill was introduced I think there were a lot of ideas coming out
about how this fund could be structured even the difference in the bill from the House version to the
finalized Senate version. What the House eventually concurred on was that it was a different concept
than what was originally intended. If we had a pot of $250 million where we could do a certain amount
of work every year, I think there could be ways to do that, but it’s really not designed to do it that way.
Chris: Obviously there’s a lot of work done by both the applicants and by you guys. Just trying to figure
out a way to salvage that work because if you don’t get let’s say in Rd 3 you don’t get your money, I
think we’re all basically saying that’s stale before you get to Rd 4 and so you’ve go to start over and it
just seems like a lot of work.
PC: I guess what you do get though is a review of your proposal and you’ll know what the perceived
shortcomings of that proposal are. We’ve seen proposals submitted in Rd 3 that looked very very much
like the Rd 2 proposals. They can keep using them and making them better.
27
Butch: In the Valdez fisheries application they took advantage of that review you provided in Rd 1 and
had a lot better proposal this time around.
Chris; That information would also be something good in the narrative so people again, see how this
whole system is progressing over the course of 2 years. People are building their capacity to write a
good proposal and the projects are looking better. They’re figuring out what they need to do.
Sara: We’re hoping for Rd 4 now that we have the process in place, the regulations in place that we
won’t have the building working so hard after the holidays and on weekends. Peter needs a couple of
days. Off.
Pete: Actually, we are going out with a new RFP that will be released next week! (Jokes)
VB: So we really haven’t decided what to do with the capped projects yet.
Chris; Can we go thru the list. How much money do you think we’re going to have left over from Rd 1? I
think I’m confused. It says you’ve already been taking as you’re instructed reallocated money from Rd 1
and using it to top off the bucket from Rd. 1.
Review of Round 1 projects not able to get underway because grant
amount was capped: (see spreadsheet)(2:45) SH unless otherwise noted.
This spreadsheet shows the projects that are possibly stalled, although they have not told us they are
not going to do them. You have appropriation out there right now with projects that aren’t moving
forward so we’re kinda stalled. A couple of them said they are not going forward – the spreadsheet
we’re bringing up now shows that analysis.
Newton Peak (Wind Farm Construction) hasn’t said they’re not going forward but they have issues.
Unalakleet (Wind Farm Construction) is done and working, Butch, do you want to talk about the
training program you’ve put together?
Butch; yes at the appropriate time.
Humpback Creek Hydro asked for Rd 3 money.
Pillar Mtn Wind Farm is pretty much done.
Kotzebue Wind Farm Expansion asked for Rd 3 money and they’re in the recommendation look s like
that’s going forward.
VB: So their Rd 3 money can plug..
Right.
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Anchorage Landfill Gas to Electric is waiting for an RFP not sure what they’re waiting for there, but it
says AEA is..
PC: Yes the Landfill Gas project has… Devany (Plentovich) has been in contact with them and we have
concluded that that project can go ahead and they’re making movements, it’s just slow, and we want to
enter into a grant construction in 2011. That’s looking pretty decent.
PC: Eva Creek Wind Farm is just feasibility so they’re proceeding. The grant’s not in place yet but
they’re still working, that’s ok.
North Pole Biomass to Electricity is underway.
Fishhook Hydro – still negotiating trying to get a grant in place. We sent the grant to them didn’t’ we?
Butch: No you’re thinking of Southfork. Fishhook is another one of those IPP’s that we’ve had numerous
issues about, what rate we’re going to allow, it’s hung up the whole thing.
Delta Junction Wind Farm – both units are up and operating. The biggest kw unit is not in the system
yet.
Delta School Wood Chip Heating System –
PC: they’re still short, they need another $900,000 to finish the project and they asked for in Rd 3 in the
yellow area.
Reynolds Creek Hydro:
PC: is trying to accumulate financing for the project, but AP& T (?) has approached AEA for a power
project loan fund. There is some scenario where private funding will be brought to finish that up.
Wrangell Electric Boiler Conversion: Are going forward.
Takatz Lake Hydro: Has asked for Rd 3 money, but they’re also moving forward on feasibility.
The only ones really stalled and are dead in the water are Newton Peak and anchorage Landfill.
PC: Yes, Nome (Newton Peak) is stalled. We need to get with John up there to see if he may have an
idea.
VB: Question on Kotzebue, shortfall $8 million, and in Rd 3 you’re getting them $4m right?
PC: Yes, they’re rescoped it, they made the project smaller so the $4m from the RE Fund in Rd 3 would
finish the project. Would be enough financing.
SH: $700,000 would close the gap to get it going.
VB: Sound in Rd 1 Nome & Fishhook at the only troublespots.
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In Rd 2 the two that are listed here, AVEC (Emmonak) and Kenai Wind Project at Nikiski.
PC: Kenai Wind Project is moving forward. That’s in progress. Alakanuk/Emmo is just taken awhile to
get moving on that. That’s a large complex project.
(2:49:38)
Chris: Kenai winds, they’re looking to go beyond 9 mws to 15 now. Didn’t we discuss some kind of 10
mw threshold for railbelt projects?
Sh: AEA is doing a study right now on wind integration, Dave Burlingame at EPS to see how much can be
added to the system., i.e. what the conditions are to bring Fire Island on line.
Chris: What did we actually say about 10 MW or more. I thought the reasoning was there’s a lot of
Railbelt projects greater than 10 mw that are definitely in play that may get other funding directly from
Legislature so we don’t want to really…I don’t remember what we said about that, clearly we’re giving
money to Eva Creek, Mt. Spurr, even tho they’re smaller….
PC: the protocol we established there was that four grids that would have stability issues if the installed
capacity was too great that we should consider that and the size that’s allowed and for the railbelt grid
we just assumed a 10 mw capacity a year ago; before the Railbelt IRP. That was the initial take on it. for
the other ones, they were feasibility projects. This is for construction. That’s the constraint we were
laying on there just for construction projects.
Chris: So since it’s more than 10 MW are we violating that protocol if we were to give money for Rd 3 or
do we want to revise that?
PC: there’s only one project and we don’t think it’s going to be that big of a factor. We can deal with
that during project development.
Chris: OK.
Continue on with projects not going fwd because capped;
Nikolaevsk Wind
Galena Wood Heating
That gets put into the Takatz project and they would still have a remaining shortfall of $921,000 out of
the $2 million.
Chris: What does that do for them? Leverage other than money or they just sit there just a million in the
hole.
30
PC: Doug do you want to talk about Takatz?
Doug: Takatz applied in Rd 3 and they’re continuing, they have the permit now and so they’re going thru
the study phase where they line out all the elements that need to be collected. It’s a formal process that
will take about a yr to lay out those studies and implementing the studies is very expensive. That will go
on for a couple of years. This money will go to advance that process.
PC: So are they being slowed down because of the short funding now?
Doug: Rd 3 would allow them to move smoothly ahead without any stops, they need the Rd 3
application related monies.
*That’s RD 1*
SH: that’s what we’re going to ask LB&A about,( reiterate)
For Rd 2:
PC:
Angoon Waste heat , finishing heat recovery work with Denali Comm funds. They don’t need AEA RE
Funds. That results in $546,000.
Akutan Valley Geo: We had basically an inconsistency in the proposal that we didn’t catch until it was
too late. Allocated $400,000 more.
This will open $ 950,000 more for reallocation. This 13,000 figure is not quite correct. The rest of it
ignore.
VB: So there’s roughly $200M in Rd 2 that’s available?
Chris; That has to be treated differently than left over money from Rd 1 because of the way it was
appropriated.
PC: That’s right since that was the ledge. What we’ve been asking is can that be rolled into Rd 3.
SH: That has to be re-appropriated. We can’t touch the Rd 2 stuff at all.
Chris: Right. To be clear, you asked for $900,000 to be reappropriated to Rd 3 and you’re going to ask or
tell them that as per your direction were going to take the $562,000 from Rd 1 and give it to Takatz.
Uh huh.
PC: What happens if there’s more in Rd 1 that doesn’t go forward. Say for some reason Nome didn’t’ go
forward and $3 million needed to be reallocated. Assuming Rd 3 doesn’t pick up this remaining shortfall,
where does that $3 million go.
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Chris: MY answer is it will be based on whether we get the $25 or $50 million this year. If we get the $50
million, we’ll need the money less in Rd 3. If we only get $25m, we clearly need that money in Rd 3.
Yes.
SH: with $50 million to move forward, it can also appropriate $22m and say here’s the other 3 to get to
25. We don’t control that conversation at all.
Chris; I think we should emphasize that there’s $50 million worth of good projects. That’s what all this
work can go toward is trying to sell the extra $25 mill appropriations. The main thing that would keep
the Legis from not giving the extra $25 million is not the projects arent’ needy, they just want to be sure
the system is moving forward in a good way. That’s why I suggest this our page narrative to kinda make
that case. I think they can look at this, there’s projects, some of them are in my district, I like this and I
want this to go on. Yeah. I want $50 m. The main thing that might cause us to have problems in getting
the extra money is how some legislators might perceive the entire program. So by proving to them how
much it has adapted over the last 20 months and all the things that you guys have done worked really
hard to make improvements to it. I think that s really important that you are able to communicate that
to them in writing. Everybody gets the same thing. You guys have done a lot of really good things to
make it move forward.
VB : It seems that obviously in the Legis session that energy is the big topic that eveybody’s talking about
right now.
SH: One other thing not on the agenda is the AHFC Report that was requested. In the
packet not on agenda. Point that out.
Public comment:
Clint White, STG, Inc.
“Thanks for the opportunity. What Steve was referencing to, we’re getting ready to launch a public view
monitoring system at the Unalakleet project which we’re quite excited about. Going to put it in the high
school. Hopefully get some students involved with the project, help them better understand the
benefits they’re receiving from it. Help them better understand the technology and basically understand
how one diesel systems work. It’s a win for schools project, primarily, but another benefit is that it’s
going to make all the production data publicly accessible by anyone. They will have information at their
fingertips, i.e., what’s this project done over its lifespan, what’s it doing currently, and they will be able
to draw on that in a very attractive user friendly way. We are excited about that. There will be a
ceremony in Unalakleet on the 25th of January, which we’d love to have any of you participate, and we
are hoping to unveil this system at that time.
32
VB: Is there a curriculum that goes along with it?
CW: There is. STG & Northern Power are working together on this project. Northern has done quite a
few of these wind for schools programs in other locations across the country. Basically we’re tailoring
what they’ve done in the past to make it more specific to Alaska in this particular project. The winds for
schools program is a national program and generally the way that works is they’ll install a turbine at a
high school or some other educational facility and that turbine is connected to that school and
integrated with particular curriculum. We’re trying to take advantage of the project that already exists
in the community, so we don’t have to build one at the school, we’re going to use what’s already
existing in the community and tie them that way.
Chris: NREL has done a lot of the work putting together that curriculum that northern power is using?
REAP is also part of the winds for schools program and it’s working with ACFEP (Ak Center for Energy
and Power) and I see that ACFEP has applied for some money here and some of that might trickle down
to us, so I just wanted to disclose that and point out that I’ve not taken a position on that particular
matter.
VB: That sounds exciting. How long is the curriculum plan or program. A semester?
CW: the curriculum is not completely developed but is basically one time sessions that can be integrated
into specific lesson plans, primarily with math and science classes.
VB: Sounds like you’ve met your own end reporting requirements that are in your grant agreements too.
CW: That will make it very easy to submit that reporting application.
***************************
SH: Lastly, Chris you wanted to talk about reporting to the legislature, we have not talked about that
too much in house yet.
Chris; I’ ve been throwing ideas out and I think butch has been taking that. But having a relatively short
narrative that talks about the program in general and some of the thinking behind all the stuff that’s
been going on, i.e, advisory committee thinking, AEA thinking could be put into writing that will help
people understand what this program, how it’s been evolving, how its’ been successful so it’s a very
succinct report about where we’re at. If they want more info they can ask for it, but just giving them
something to chew on is important before they ask. What’s been happening in Rds 1 2 etc, and attach to
the graphs, and the spreadsheets. Again, I don’t think a lot of people are going to spend a lot of time
reading the spreadsheets.
Denali D: It would be nice to have something like that attached to the recommendation list.
Chris: We have a number of protocols we have established and I know some of them have gotten into
the minutes and so on, but I don’t know if we have, as an advisory committee, have any kind of a
33
document that kind of summarizes them all. It would be helpful for us to start accumulating those
protocol into a document. A policy document so we won’t have to remember what we said a year ago.
Why it was 10 Mw whatever. That’s not a rush on that, but it would be helpful.
VB: Agree, particularly as infrequently as we meet.
Chris: I think a big part of that report to the legislature too is the fact that we have regulations. That’s a
big deal and a lot of people don’t know that. I’ve had a lot of discussions lately with people you would
think would know that, but who don’t know that. It’s a big deal to put out there in front. We have the
regulations in place, this is how we changed the RFA over the course of three rounds, etc. Jus try to
figure out ways to address these people’s concerns before they bring them up.
VB: I’ve ran into a few whose names are co-sponsors of the bills who don’t know what’s in thebills. They
get hit with a lot and have a lot to try to absorb too.
Chris: That’s just it. If we have a 4 page document there are people like myself and others who are
going to be spending time in Juneau who can reiterate, you know. “…did you see that document…oh by
the way this is what it means….” It just helps drive that message home that this program is really
working.
VB: Good idea.
Chris: I don’t know whether a list..there’s the pie chart…and stuff, I maybe there is a list that says of
rounds 1 and 2….put the 107 projects on list, with different colors, like here, these are the projects that
are done…there are in this stage, however you define it, down to these are the projects that haven’t
even received the money because the grant agreement is still being negotiated. That would also be a
very snapshot level , a way for people to look at the 109 projects….dollar figures…year for Rd 1 or 2,
etc.
PC: We do have a pie chart that has been set up under the reporting. Maybe a little more detailed than
that.
Chris: That’s what I’m saying, instead of just the pie chart, I’m saying the list.
Sara: The pie chart is more public than usually what we’ve done for reports to LB&A and Sen. Hoffman
requested a report . We take that and make a snapshot of it and add some additional detailed
information. Unfortunately the timing of the request from Sen. Hoffman’s office was right in the middle
of the intense evaluation so I think some of the explanations may have been a bit thin as some of the
projects are, but that’s we’ll try to do that, but it’s not exactly a push of the button automatic thing to
get the details, but we have general reporting procedures..
Chris: I just think I’m trying to think from the perspective of the people asking questions, what kind of
questions are they going to ask, one of them will be where did the money go and how much of it has
been spent, which projects are done, etc. We need to tell the story.
34
Rep. Thomas stated we need to have a plan as to how we are going to reappropriate the money for
projects not going forward. One to two years may be too long and we may end up losing the monies,
but 18 months should be the timeline that we should be allowed to try and use it to show significant
progress on a project.
Sara stated 18 months in Ak is short, but is a place to start, but should be on a case by case basis, stating
legitimate reasons why a project hasn’t moved forward.
Rep. Thomas agreed that we need to have a timeline in place.
Vb: Are we at a point to recess until tomorrow.
PC: Introduced Audrey Alstrom.
Chris: Thanks everyone for working so hard over holidays. Appreciate all work done.
VB: asked Rep Thomas if he’d be available tomorrow, he said he’d have LB&A meetings from 10-12 and
should be available after that.
VB: Want to make sure we have 4 committee members for final recommendations so it carries the wt of
the actual committee members.
Chris Let’s meet at noon.
Rep. Thomas; Just recess ; I’ll make a note to myself to be on at 12.
Chris: We should call other members to see if they will make it tomorrow.
Shauna: will change the notice on the state online web system we have to do but she can send email out
for that and well have to redo a new go to meeting. Telecon same, same code.
Chris: Jay is still on the phone, so we’ll let the other 3 members know it’s changed to noon. The most
important notification is to the committee members.
VB: If we can make actual phone call to jim and brad and Jodi and the Senator.
Chris: Let’s recess the meeting instead of adjourning, at Sen. Thomas suggestion.
VB: Hearing no objections, The meeting then recessed at 1:30 pm until noon on Jan. 14th.
****end Jan 13th***