May 23, 2013 | Vol. 39, No. 21

SEAPA CEO talks projects and business

Southeast Alaska Power Agency CEO, Trey Acteson, provided a presentation during the Assembly meeting on Monday night outlining the services and mission of the SEAPA organization.

Acteson stated that SEAPA's mission is to provide the lowest wholesale power rate consistent with sound utility planning and business practices. SEAPA exists for the long-term benefit of the member utilities and the rate payers, providing unified regional leadership for project development and prudent management of the interconnected power system.

In the SEAPA interconnected region there are a total of 11,534 meters in the Petersburg, Wrangell and Ketchikan areas.

“We are a regional power system and power coordinator,” Acteson said. “SEAPA provides about 62 percent of the annual load in the three member community that we serve. As the owner of Swan and Tyee, SEAPA is able to bundle these services into our 6.8 cent wholesale power rate.”

Acteson also explained that SEAPA provides water management services.

“We maximize our existing hydropower resources,” he stated. “This is a process that requires continuous monitoring, forecasting, snow surveys and system modeling and the direct result is less diesel generation.”

SEAPA owns 175 miles of transmission lines, including 14 miles of submarine cables with four crossings and four cables per crossing.

“We plan, coordinate and oversee these transmission lines from Petersburg all the way to Ketchikan and there is a huge amount of risk that SEAPA absorbs with this maintenance,” Acteson stated. “This is large area and is very challenging geographically.”

This management includes annual inspections and maintenance, outage response, condition assessments, life extension, pole replacements, marker ball replacements, project management and records management.

“There is a lot of things happening behind the scenes that people just don't realize,” Acteson stated.

SEAPA owns the Swan Lake and Tyee Lake hydro projects and it plans, coordinates and oversees major maintenance.

“SEAPA pays for the hydro facility employee wages and benefits along with contractors, consultants, technical support, equipment parts and materials,” he stated. “This is the largest component of our budget and the total operation and maintenance expense for fiscal year 2013 is $6,617,945 and that excludes renewal and replacement costs.”

According to Acteson, the updated renewal and replacement forecasts a significant re-investment of approximately $206 million over the next 30 years.

“Our renewal and replacement efforts help ensure long-term reliability and availability of hydropower across our interconnected system,” he stated. “This includes Wrangell reactor replacement, helicopter pad replacements along with satellite communications upgrades and these are some very expensive projects.”

SEAPA, as the owner of these facilities is responsible for the FERC regulatory compliance as well.

“The FERC licensing initiatives are very complex and expensive,” Acteson said. “They typically are a multi-year effort requiring meticulous coordination that involves several different agencies.”

Acteson explained that the relicensing of the Swan and Tyee Lake projects will cost an estimated $5 to $10 million. The Swan Lake license expires in 2030 and Tyee Lake expires in 2031.

“It may seem like these dates are a long way off, but we still need to consider where the funding for these will come from and will the relicensing result in a resource reduction,” Acteson stated.

SEAPA also holds all permits for the two projects and it constitutes a complex process that is required to maintain operation of the current facilities along with what may be necessary to develop new resources.

According to Acteson, risk management is an important factor in operating these projects and has the task of identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor and control the probability and impact of unfortunate events and maximize the realization of opportunities.

“Risk management is woven into the fabric of SEAPA,” Acteson said. “It is what we do every day.”

SEAPA also pays the insurance premiums for the hydro projects at an annual cost of approximately $500,000 and SEAPA shoulders a significant exposure due to high deductibles.

“We self insure our submarine cables, and they are expensive,” he stated. “We self insure our overhead transmission lines, and they are really expensive. Both of these will age and fail over time and have to be replaced.”

The annual principal and interest for the debt service for fiscal year 2013 is $1,355,808 and is covered under the 6.8 cent wholesale power rate.

“We have been performing ongoing regional analysis as part of our integrated planning process,” Acteson stated. “Our interconnected system must remain stable and reliable as new resources are integrated and new projects must be appropriately timed to minimize impact to rate payers and avoid stranding assets.”

The Swan Lake Reservoir Expansion Project will raise the dam height by six feet and the improved structure would spill at 345 feet instead of 330 feet.

The budgeted project feasibility for fiscal year 2013 is $808,000 for this project.

SEAPA has been tasked by the State to perform follow-up activities to the Southeast Integrated Resource Plan through a $3 million

DCCED Grant.

“This grant funding will cover planning and reconstruction work for the next generation of hydroelectric projects in Southeast Alaska,” he stated. “This grant will define and address the lack of hydroelectric storage for Swan Lake, perform hydro site evaluations in our region and define business analysis for subsequent hydro development.”

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