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HomeMy WebLinkAboutDRAFT_Meeting Minutes Nov 9 2010_final Renewable Energy Fund Advisory Committee Meeting November 9, 2010 Page 1 of 6 Renewable Energy Fund Advisory Committee Meeting November 9, 2010 – AEA Boardroom 1:00 pm to 4:00pm DRAFT MINUTES 1. Call to Order The Renewable Energy Fund Advisory Committee convened at 1:05 p.m. Chairman Vince Beltrami presided over the meeting and stated he would be leaving the meeting at 2:00 pm. Ms. Hall will represent him for the remainder of the meeting. 2. Roll Call: Committee Members AEA Staff Other Participants Chair Vince Beltrami Mike Harper Jodi Fondy, Denali Commission Jodi Mitchell Sara Fisher-Goad Joelle Hall, AFLCIO Sen. Lyman Hoffman (phone) James Strandberg Bob Baldwin, Kenai River Watershed Foundation Brad Reeve Peter Crimp Wyn Menefee, ADNR Division of Water Hannah Gustafson (for Mr. Rose) Butch White Mike Nave, Department of Law Jim Posey (phone) Douglas Ott Rep. Paul Seaton/Homer (phone) Emily Binnian Kaarle Strailey, AK. Center for the Environment (phone) May Clark Pat Walker, Sen. Hoffman’s Office (phone) 3. Public Comments Kaarle Strailey, Alaska Center for the Environment, stated they are a local, non-profit environmental education and advocacy organization whose mission is to enhance Alaskans’ quality of life by protecting wild places, fostering sustainable communities and promoting recreational opportunities. ACE advocates for sustainable policy on behalf of over 6,000 Alaskan members. Referencing Agenda Item 6A and ACE’s 8/23/2010 Valerie Connor letter to AEA regarding the REF evaluation guidelines, he reiterated their main concerns were that levels of community and public support should carry a greater weight in the grant application review process and more extensive environmental review impacts should be done before awarding grants. He said he would remain on the line during the meeting to answer any questions. 4. Agenda Comments There were no agenda comments. 5. Approval of Meeting Minutes – June 8 and August 13, 2010 The meeting minutes of June 8, 2010 were approved unanimously with minor typographical corrections. MOTION: Ms. Mitchell moved to approve the meeting minutes from the June 8, 2010 Renewable Energy Fund Advisory Committee. The motion was seconded by Mr. Reeve. The minutes were unanimously approved as presented, with minor typographical errors to be corrected. The meeting minutes of August 13, 2010 were unanimously approved with minor typographical corrections. Renewable Energy Fund Advisory Committee Meeting November 9, 2010 Page 2 of 6 MOTION: Ms. Mitchell moved to approve the meeting minutes from the August 13, 2010 Renewable Energy Fund Advisory Committee. The motion was seconded by Mr. Reeve. The minutes were unanimously approved as presented, with minor typographical errors to be corrected. 6. Round 4 Review Progress & Issues Needing REFAC Input Mr. Crimp announced that the “GoTo Meeting” online session will not occur for this meeting as previously planned. AEA received 108 proposals in mid-September and stage 1 review (eligibility and basic review) was completed later that month. Two proposers dropped out. AEA hired five economic firms. ISER updated fuel price projections, revised the economic analysis template, and both were posted on AEA’s website. The economic firms are selected through a competitive process and ISER is coordinating the review, providing assumptions for the economists and reviewing their work. To date they have delivered approximately three fourths of the economic review. Under agreement with AEA, DNR Division of Mining Land and Water, Division of Forestry, and Division of Geological and Geophysical Surveys (DGGS) provided comments on resource availability and resource management considerations for the proposals. All of that information was entered into our database. AEA has 10 staff involved in reviewing applications. They are about one-fourth of the way complete and are making good progress with no problems. Ms. Mitchell asked if there was a preliminary list of the Round 4 applicants available. Mr. Crimp said they were posted on our website and he would provide the REFAC with the Excel version. 6a) Alaska Center for the Environment Issue Mr. Crimp said Mr. Strailey of ACE summarized the concerns of the letter and noted the ACE reply was the only one received in response to our request for public input when the RFAs were sent out. Mr. Menefee reviewed the points brought up in the ACE letter. 1) ACE is concerned that the AEA project review does not provide adequate environmental review nor does it provide significant evaluation of local support. 2) ACE feels there is inappropriate weighting of environmental review on local support in the ranking. 3) ACE feels there should be adequate funding of ADF&G, DNR and ADEC to supply professional review of these projects. 4) ACE suggests we should not fund hydroelectric projects in the Kenai River watershed. AEA has drafted a response letter and agreed to bring the discussion to the REFAC. DNR provides basic environmental and social concern reviews of what is known during the Stage 2 review. Although it is not as in depth as in permitting, it is a high level review to find out if there are major concerns or major environmental hurdles in a project. AEA believes the ranking is appropriate with criteria discussed at previous REFAC meetings. AEA believes it has provided both the appropriate amount of weight for both the environmental review and the local support. Although there may be issues identified by DNR and/or by the project review committee when they are looking at these projects, unless there is an irreconcilable problem, the project still deserves consideration and ranking. There is an assertion in the ACE letter that if there is any sort of environmental problem or concern then the project is taken off the table. We believe there should be a consideration because the role of permitting is to go through and find out if issues can be mitigated as they arise. A project may be scored and ranked lower because of the issues that are raised. The permitting process provides in depth review of both environmental and social concerns through a public process with a comment and appeal period. AEA does not wish to make a duplicative or replacement permitting process and cannot afford the time or the cost for a full environmental review / full permitting process before ranking. Part of the funding is the feasibility to identify whether the project will work or not and that may mean going through the permitting stage. Phasing required by project grants also prevents too much funding being allocated to a project before knowing what the costs are. For instance, the State may invest in the feasibility assessment of a project to determine whether it is likely the project is going to work or not. Funding will not be granted thereafter if it is not going to work, so feasibility is an important stage when considering funding. The resource agencies need to be funded to absorb the additional permitting workload, but AEA is providing DNR enough funding for RE Fund application review. The resources agencies haven’t received funding Renewable Energy Fund Advisory Committee Meeting November 9, 2010 Page 3 of 6 for actually doing the permitting review of the projects, but we agree with ACE that they should be funded for that. Ms. Mitchell agrees that we are doing what we can and has empathy for ACE, but said that’s not really our purview. Mr. Crimp stated when AEA scores the proposals, if there is a clear fatal flaw for a project and we know the project will not be permitted, we have the option of recommending no funding. Regarding the Kenai Hydro projects, Mr. Ott stated four applications were originally submitted in the Moose Pass area that were funded for preliminary study and after the preliminary studies the applicant ended up considering no further action on two of the sites. Two of the other sites were combined into a single project moving forward. They later dropped one of the two sources they were combining, resulting in the Grant Lake project. Mr. Menefee commented on the ACE request that we not fund any hydro projects in the Kenai area; he said we understand there are good and bad projects, but the newer hydro projects have gone through more sensitive permitting with an increase in salmon habitat returning to those areas after the project. It can be done well with appropriate permitting. Mr. Crimp stated there are many feasibility and reconnaissance analyses funded and most of them may not pan out. Under direction from the REFAC, AEA is allocating most funding towards construction. The smaller allocation for reconnaissance and feasibility may provide useful results by identifying projects that have problems and should not receive further funds. In response to Mr. Reeve’s question as to why the sponsors withdrew on the projects mentioned above, Mr. Ott said some reasons given were: less economic benefits involved with two of the projects, significant fish habitat issues involved, and local opposition concerns. Mr. Crimp stated AEA will respond to the ACE letter consistent to what was discussed. Mr. Reeve asked if everyone received a letter from Becky Long regarding concerns on funding biomass in the Mat-Su Borough. He gave the letter to staff to be placed on the next meeting agenda. Mr. Ott said at a meeting today on a hydropower project, DNR announced there was going to be a new fee schedule established to charge projects for the state permitting services. 6b) How to address letters from Legislators in local support score Mr. Crimp stated letters from Legislators were received in support of projects that will figure into the project scoring so REFAC direction is needed on this. Mr. White said a resolution received from a board, etc. for local support is given two points. An entity letter of support is given up to 3 more points. Up to five points are given for local support and the points are not cumulative. In Round 4, five projects (3 Peninsula, 1 Juneau, 1 Sitka) were received with letters of support from a local Legislator, so the approach was taken that a Legislator was counted as an entity. REFAC direction was asked on this matter. Mr. Reeve stated we like to see local support from the communities. Senator Hoffman said Legislators should not be counted as an entity and this was agreed to by the committee. 6c) How to address consistency with Energy Pathway in scoring Mr. Crimp stated the REFAC had previously decided to favorably score the projects that were consistent with the Energy Pathway. A proposal was received for reconnaissance feasibility biomass development and exactly corresponded to the Pathway. In the existing evaluation guidelines there is nothing to provide Renewable Energy Fund Advisory Committee Meeting November 9, 2010 Page 4 of 6 a higher score for that, so he wanted to bring up the possibility for modifying the project readiness score to benefit reconnaissance projects that are consistent with the Pathway. (A ten minute break was taken and the gavel was turned over to Mr. Reeve) The entire evaluation guidelines dated January 21, 2010 were provided to the committee and reviewed. An additional criterion would be added under Project Readiness to the effect that, if an applicant is proposing reconnaissance work consistent with the Energy Pathway, this condition would warrant a score of 4 points. Other Readiness criteria would remain the same and a maximum of 10 points would be given for Readiness. Mr. Reeve stated the Pathway is tying into existing State energy planning and has had local review by the communities to find an energy pathway that makes sense for them and will bring community involvement back into the process. Senator Hoffman stressed regional balance needs to be addressed again and shown in the allocation. Mr. Crimp stated the Stage 4 review on statewide regional ranking (on Page 8 of the guidelines) will still be followed for geographic balance and nothing will be changed from the protocols established previously. Another REFAC meeting will be held in early January to discuss the results of the scoring before Legislative session begins on January 18th. Ms. Mitchell said the AFN passed a resolution supporting the Energy Pathway. 7. Round 1-3 Construction Project Schedule Review The handouts for the meeting were distributed. Mr. Crimp said we have seen a bit of slippage for some projects; however, most are progressing and the published construction schedule is our best estimate. The projects are generally on track but a few will not be completed until next year. The Juneau geothermal aquatic center won’t occur until late winter. The heat pump project at the Sealife Center will occur next year. A few are not yet determined. Ft. Yukon district wood heat project needs organization. 80 percent of funding has gone into construction in the amount of $118.3 M. Much of the reconnaissance and feasibility of $18.4 M is for geothermal assessment data collection and physical activity. Estimated cumulative annual fuel savings for Rounds 1 through 3 were reviewed and the chart showed for projects that are constructed. AEA assumes fuel savings (in million gallons) are realized the calendar year after project completion. 10 million gallons of fuel per year are displaced by the projects following completion. The biomass fuel savings jumps in 2012 due to the Anchorage Landfill gas project being completed. Mr. Posey asked if negotiations were completed on the project. Mr. Crimp stated the Municipality came to AEA with a contractor, Doyon, that had proposed to make power in reciprocating generators and purchase landfill gas from the Muni (they will pay the Muni). AEA believes it is an excellent project that brings good benefit to the Municipality and they are proceeding. Senator Hoffman said the chart was excellent, but needs to be looked at from a regional standpoint as well, emphasizing rural Alaska. Mr. Crimp said a regional breakdown will be made and provided at the next meeting. Senator Hoffman said we need to look at how this program can assist in reducing costs with alternative energy for heating homes. Mr. Crimp said a similar chart can be prepared showing heating vs. electrical fuel displacement, and that the heat recovery and biomass projects are generally where we are seeing the heating fuel displacement in wood and heat recovery. He mentioned that perhaps Devany Plentovich, AEA’s Biomass & Heat Recovery Program Manager could address the committee on program strategy, as there’s a lot going on in program development. Mr. Posey wanted to know how much funds were for heat recovery and biomass and a chart would be helpful showing those. Mr. Crimp said those figures can be prepared. Ms. Mitchell commented that the graphs are useful to defend the program, but would like to see PCE savings shown. Mr. Crimp agreed. 8. Update on Existing Grant progress Mr. White referred to the handouts and said in Round 1, 78 projects were selected and all but four are in place due to grantee issues. In Round 2, all projects are in place. In Round 3, we are halfway through and are making progress in getting the grants in place. The money is being disbursed, and finance’s goal Renewable Energy Fund Advisory Committee Meeting November 9, 2010 Page 5 of 6 is a two-week turnaround. Some projects were given up for various reasons, including meeting all of the requirements and everything is on track, although the money may not be moving out as fast as some would like. Mr. Reeve agreed these projects take time and must be done right and the Committee needs to remind folks of what it takes to make successful projects. Ms. Gustafson asked what the reallocation procedure is for the $2 M accumulated from all of the rounds. Ms. Fisher-Goad stated the LB&A had directed AEA in Round 1 to have the money go to Takatz Lake and that project is nearly fully funded. Funds left over from canceled projects are reported to the OMB and Legislature. In Round 4 there is recommended funding of $50 M, but there is money in the fund for projects not moving forward. We cannot divert unallocated funds to a project. Mr. Crimp said AEA realizes some projects are not progressing and we will need to take action to have those funds returned and reallocated. Ms. Fisher- Goad corrected by saying we are not going to be seeking money back, we never gave them the money. There are two types of projects: ones where grants are issued, which we can move to cancel the grant if they are not making progress; and grants not in place which are easier to de-fund – money is obligated, but the grant is not in place. In Round 4 we stated in the RFA’s that if a grant is not in place in a year, it is presumed that we will reallocate the money – that was not explained in the earlier rounds. AEA desires to give the grantee the benefit of the doubt in these situations. Reallocation was discussed internally and the difficulty is that projects become stale and to reevaluate an old project would not work. So the most appropriate way to do it is to put the money forward to current projects. Our goal is to have the appropriations people understand what’s available. In Round 2 there weren’t enough projects for AEA to recommend more than $36.8 M. The REFAC needs to think about how this will work. 9. Frequency of progress reporting Mr. Reeve pointed out that, for example, the NWAB is spending a lot of time on the monthly reports, but aren’t at a point where the project has progressed at all. AEA needs to decide if they want to do quarterly or monthly reporting. Quarterly is typical, but AEA staff desires adequate control for the amount of money going out. The REFAC needs to look at different reporting triggers, especially for the smaller communities with minimal staff. Mr. Crimp said it was just the construction projects where money can be flying out the door very quickly – a big concern for AEA is that even though it is on a reimbursement basis, once somebody has bought something, the decision has been made and if AEA finds the grantee has not fulfilled a milestone, it is a problem. Mr. Strandberg stated a monthly report or email stating there’s been no activity is helpful to keep things under control as there’s more projects than project managers. We need to know what’s going on, but we also do not want a detailed and rigorous reporting process for projects with no activity. Usually the grantee makes the expenditure then seeks reimbursement, AEA makes sure it is within the scope of work for the project. We have the responsibility to make sure we have successful projects. There is that rational middle ground in having the grantee report to and keep in touch with us so we can keep our fingers on what is happening. We need to know there is no monthly activity. Mr. Crimp said a project trigger could be final design and permitting. A monthly report is not going to be necessary if there is not much money being spent. Before the REF, we required monthly reporting for construction projects. Mr. Reeve said the trigger idea could be based on milestones on large reimbursements, etc. to keep reporting down. Mr. Strandberg said on the larger more complex projects we are requiring a schedule of values and monthly reporting on each component’s percent complete link to the requested reimbursement so we can track the amount of money being spent is equivalent to the percent complete. If there is no activity or the level of activity is small we might be able to trigger into a lesser reporting requirement by email. Mr. Reeve agreed and stated the smaller projects need to have more meaningful reporting – quarterly or based on a trigger. Mr. Posey felt quarterly would work and incremented grant percentages could also trigger another report. Mr. Crimp said that would be good for some grantees but not for others. He said he would discuss this with the project managers and will look at making sure we are only requesting reporting to minimize the amount of paperwork. Ms. Mitchell said for larger purchases or large contracts Renewable Energy Fund Advisory Committee Meeting November 9, 2010 Page 6 of 6 in the Rural Utilities Service (RUS) program, they give finance an estimate of what will be spent for the month, and have always come under cost. Mr. Strandberg said AEA has been flexible for equipment purchases; either an advance is made or an arrangement is made on a purchase order so that the bill is sent directly to AEA. Although AEA doesn’t necessarily like to pay bills directly, there are ways to do it. Mr. White agreed that we will work with grantees and some have reported by email that there is no activity for a period and the PM’s are fine with that. Mr. Reeve said we can come back and respond to Mr. Posey’s questions, to see if there’ are ways to get meaningful reports to give you the tracking ability you are looking for to make it as easy on the grantees as possible. We’ve already judged their projects in a sense and said they are capable of doing this and trust them to do it right. We could report on this for the January meeting. 10. Performance driven / Strategic grant making Mr. Crimp had nothing to report. He said Chris Rose suggested having staff come up with proposals or some ideas for performance driven grants. We haven’t had enough time to do that. AEA alternative energy and energy efficiency staff are preparing program plans that show our overall goals and objectives and how we would approach hydrokinetic wind, geothermal projects, etc. After the proposal review process is completed in January, it might be a good time to consider program strategy. Heating projects need to be discussed further. Mr. Reeve agreed and noted that in many of the villages, heating expenses are often more expensive than electrical. Mr. Posey asked staff if we expect another $40 M or $50 M in Legislative funding and we need to look at what the next two or three years looks like if so. Also, are we getting projects that fall within the 80/20 Legislative mandate split. We should consider caps coming off if there are viable projects that could make a meaningful difference in the Railbelt. Mr. Crimp said at the next meeting we will have a better idea of the quality of proposals and the amount of construction funding to go out. Then the possibility of increasing the caps could also be discussed. Tasks as a result of this meeting: 1) Geographical report to see how grants stand regionally; 2) Report on electrical versus heating grants; 3) Discuss options for reducing reporting requirements with AEA project managers; 4) Report on how grants are impacting the PCE Program; 5) Respond to Becky Long letter regarding funding biomass in Mat-Su; 6) distribute list of Round IV applications to REFAC; 7) Review Round IV grants at the next meeting; 8) Look at the performance driven/strategic grant making topic at a later date; 9) Respond to ACE letter; 10) Look at community “pooling” – see if we can pool communities together to combine them with expertise to get them to apply for grants at lower costs; and 11) Future legislative funding and capping of projects. 11. Next meeting date: January 7, 2011. 12. Adjournment The meeting was adjourned at 3:00 p.m.