EKLUTNA WATER PROJECT

Eklutna Lake has been selected by Anchorage as the water source for a long-term public water supply project. The water project, scheduled to begin operations in 1988, will divert a portion of the water now

available for power production at Eklutna hydroelectric project. The latest estimates indicate about an 8% reduction in Eklutna energy production by the year 2000, and a 20% reduction by 2025.

We have negotiated an agreement with Anchorage which provides for compensation for the reduced energy in kind and without cost to APA and our power customers. With the agreement, there will not be any significant changes in amounts of power and energy available to APA for marketing, so the water project will not have adverse impact on project repayment or on amounts and value of power and energy available to our customers.

Anchorage is seeking an amendment to the Eklutna Project Act which will permit their use of part of the water reserved in that Act for the power project. We support Anchorage on this amendment, based on the compensation agreement.

CRATER LAKE UNIT

As reported previously, the Snettisham market area has urgent need for power and energy from the Crater Lake unit. This will increase the firm energy available from Snettisham by 60%, covering power demands that would otherwise be met from oil-fired generators.

The Corps of Engineers has essentially completed designs and has received the necessary approval to begin construction this year. We will continue to work with the Corps towards expeditious completion.

INVESTIGATIONS

The justification materials summarize completion of most of the APA study work started in prior years.

Perhaps the most important is the series of studies on potential interties between the Snettisham Project, other parts of Southeast Alaska, and neighboring areas of Canada. This work indicates that portions of a Southeast Alaska grid are feasible, and that a region-wide grid may be justifiable within a few years.

Our 1985 request enables us to maintain some in-house planning capability primarily to assist in working out the details of a possible merger of the State and Federal power programs in Alaska.

COMBINATION OF STATE AND FEDERAL POWER PROGRAMS IN ALASKA

My testimony last year indicated APA's intent to work with our State counterparts and other interested parties toward a specific proposal for combining the State and Federal power programs in Alaska under State ownership. Such action would require enabling Federal and State legislation. I am convinced that this item is desireable for the Alaskan situation which involves a small, essentially single-purpose power program and a new State power program pursuing similar objectives.

We have not yet proceeded beyond informal discussions because of some higher priority issues in the State program. Those issues include action toward licensing and construction of new projects and long-term financing arrangements for projects now coming on line.

We intend to go into detailed discussion of this issue as soon as

the State is prepared to do so.

I want to add that our 1985 request is premised on continuing our present responsibilities and provides adequate funds to do that well. Mr. Chairman, this concludes my report, and I would be happy to answer questions.

BIOGRAPHICAL SKETCH

Mr. Cross was appointed Administrator of the Alaska Power Administration in June 1976. He has been on the Alaska Power Administration (APA) staff since the agency was formed in 1967. He was a staff engineer in

the APA Planning Division between 1967 and 1973, and Planning Division Chief from 1973 to 1976.

Mr. Cross entered Federal Service in 1956 as a hydraulic engineer with the Bureau of Reclamation. Between 1956 and 1967, he had planning

assignments with Reclamation in Colorado, Wyoming, Nebraska, and Alaska, with a 2-year break for active service in the U.S. Army.

Mr. Cross is 50, and a native of Lincoln, Nebraska. He attended public school in the states of Nebraska, Washington, and New York, and is a Civil Engineering graduate from the University of Colorado. Cross has been a resident of Juneau, Alaska since October 1964.

ALASKA POWER ADMINISTRATION

QUESTIONS SUBMITTED BY SENATOR HATFIELD

Status of Combining State and Federal Programs

Question: Explain in more detail the current status of efforts to combine State and Federal power programs in Alaska.

Answer: Thus far, the efforts have not progressed beyond informal discussions with Alaska Power Administration's (APA's) customers and various State officials. APA advised the State that they would like to examine the issue in detail as soon as the State is prepared to do so. APA's State counterparts want to settle some financing and marketing problems associated with four new State projects before taking up the question of merging the Federal and State programs. The State Administration and Legislature are working hard on marketing contracts and a new legislative package which can settle this current financing problem and pave the way for financing future projects like Bradley Lake and Upper Susitna. When this is completed, APA expects detailed work can begin towards a specific proposal to combine the two programs.

Question: What are the pros and cons to the Federal power

marketing effort?

Answer: The Federal power program in Alaska has been effective in terms of efficient operation of the two projects and defining future power and transmission programs that should be pursued. The Federal efforts have provided substantial help to the new State power development programs. These are valuable pros.

The cons involve reasons why it appears more sensible for the State to take over the Federal power program in Alaska. The State has taken the lead in financing and developing new power projects and transmission facilities. Combining the existing small Federal program with the small but growing State program should result in a single, more efficient and stronger program that is better able to handle the challenges of the future.

Automation of Powerplant Operations

Alaska Power Administration plans to shift the operations of the Eklutna powerplant and the Snettisham plant to remote supervisory control and contract operations in 1985.

Question: What benefits and savings do you expect from this change?

Answer: The Snettisham plant is now operated by remote supervisory control at the Thane substation in Juneau. By contract a local utility provides operators on a round-the-clock basis, 365 days per year, at a cost of about $250,000. This benefits both APA and the local utility because, in effect, the operators are dispatchers for the entire Juneau area power system. The change at Snettisham is a proposed net-billing arrangement beginning in FY 1985.

The new proposal is to automate the Eklutna powerplant by installing a Supervisory Control and Data Acquisition (SCADA) system at an estimated cost of $1,130,000. The system should be fully operational by early 1986.

The automation of Eklutna is expected to result in a net reduction of three FTE's by the end of FY 1986 and net annual savings of $253,000 by 1987. Installation cost of the SCADA system should be recovered in five years.

By contract a local utility will provide routine monitoring of Eklutna operations by remote control when automation of the Eklutna powerplant is complete.

Question: In your professional opinion, could project maintenance be provided by contract services? Please explain.

Answer: OMB asked APA to review possibilities and feasibility of contracting out additional functions, but APA has not yet come up with specific recommendations. On the operations side, APA has had a good success at Snettisham in contracting out the real-time operations and monitoring functions. This is the operator on duty 24 hours a day. APA handles in-house the other operations functions such as scheduling, agreements with interconnected systems, operating criteria and orders, and has standby operating capability in case of failure of the supervisory control system.

Similarly, APA now contracts portions of the maintenance activities when that appears to be most advantageous, but has inhouse capability to handle inspections, corrective maintenance, trouble-shooting and repairs, and responses to emergencies. These same people handle most of the routine, preventative maintenance, portions of which may be suitable for contracting out in the future.

Snettisham Transmission Facilities Upgrade

Question: What is the current status of work to upgrade the transmission facilities related to the Snettisham Project?

Answer: Several things are being done that will help get the best possible reliability for the Snettisham transmission facilities. APA is continuing a carefully designed and quite intensive inspection and maintenance program for the line which was first implemented in 1982. This is the best defense against major tower failure such as occurred in March of 1982. They are also taking action to improve the protective relay system and correct a line charging problem. Plans are being made to complete an engineering study to find the best solution to the line charging problem in 1984.

Question: What work is planned for 1985?

Answer: The Alaska Power Administration will continue the inspection and maintenance program in 1985. Other specific activities will depend largely on results of the study on the line charging problem.