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HomeMy WebLinkAboutAEA 2016 Annual Report-2016-A2016 ANNUAL REPORT ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 2 . REPORT TO ALASKANS Alaska Energy Authority (AEA)’s mission is to reduce the cost of energy in Alaska. For the last 40 years, we’ve been working toward this mission with a diverse porTolio that has adapted to changing needs and circumstances. Over this period, programs and projects have evolved. However, the organizaWon has been consistent in our delivery of high impact benefits to communiWes and uWliWes around the state—we help keep the lights (and heat) on. An underlying theme throughout AEA’s porTolio of programs and projects is “communiWes require energy.” We take a whole-community approach to finding the most cost- effecWve, acWonable soluWons to high energy costs. In the recently completed Alaska Affordable Energy Strategy (AkAES), this whole-community approach points to the criWcal need for ensuring energy safety, stability and reliability in the most affordable manner possible. The need to maintain core rural energy services such as circuit rider, technical assistance, operator training and electrical emergency assistance is now stronger than ever. These, combined with flagship rural energy programs (Rural Power System Upgrades and Bulk Fuel Upgrades) are the criWcal acWviWes that help keep the lights on in rural communiWes at a relaWvely low cost to the State. These services protect investments already made in the construcWon and operaWon of energy infrastructure. Without these services, there would surely be an upWck of costly electrical emergencies or catastrophic power generaWon failures. Also contribuWng to energy safety, stability, reliability and affordability in rural communiWes are those programs and projects administered for statewide applicaWon, programs like the Renewable Energy Fund and energy efficiency projects. Since the Renewable Energy Fund was established in 2008, AEA has funded 287 grant applicaWons for varying stages of project development, which has resulted in 70 operaWonal projects, with 21 more projects expected to come online in the near future and approximately $63 million saved annually from offset fuels. Over a similar Wmeframe, AEA’s Village Energy Efficiency Program has implemented improvements to public buildings and faciliWes in nearly 150 communiWes around the state, bringing electric and heat savings to areas that pay some of the highest energy costs. AEA’s relevance conWnues into the Railbelt region. Our role as an asset owner of Railbelt infrastructure brings great benefit to all six Railbelt uWliWes and their ratepayers. AEA’s seat at the table and role in managing the Alaska InterWe and Bradley Lake Hydroelectric facility is to bring the single, unique and unifying voice of looking out for the best interest of all stakeholders, not just those in a given service territory. In light of the changing fiscal climate, AEA is conWnuously adapWng. Over the course of the last year we have been moving toward a project development and finance emphasis as a way to conWnue helping communiWes and uWliWes bring good projects to fruiWon. This includes both tradiWonal power house improvements as well as the appropriate integraWon of locally available renewable energy resources and energy efficiency improvements. This emphasis is built on the extensive experience of our 40 years working in rural, Railbelt and urban Southeast Alaska. Our mission, the work we do toward that mission, and our ability to adapt remains ever relevant as the State grapples with difficult budgetary challenges. AEA’s work brings safety, stability, reliability and affordability to Alaska’s communiWes for the benefit of consumers and uWliWes, community organizaWons and businesses alike. Sincerely, Michael E. Lamb AEA ExecuWve Director ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 3 RURAL PROGRAMS The following are programs and projects benefi9ng exclusively small, rural communi?es. Addi?onal benefit is also delivered through programs and projects statewide, as will be discussed in the subsequent sec?on. ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 4 Electricity provides for lighWng, communicaWon, heat and power necessary to operate infrastructure that supports safe and healthy living condiWons. In rural communiWes throughout Alaska, electricity is generated by a small, local “system” (generaWon and distribuWon) using diesel fuel that results in electricity costs that are three to five Wmes higher than in urban parts of the state. Of 200 rural Alaska communiWes, approximately half are served by cooperaWves or another form of uWlity that performs under a well-established organizaWon. Others are served by very small enWWes, some of which experience technical and administraWve problems due to lack of economies of scale and/or lack of specialized skills in the community. AEA’s Rural Power Systems Upgrade (RPSU) program builds and retrofits code-compliant faciliWes in communiWes of less than 2,000 people, providing stable and reliable power. The average efficiency improvement in diesel generaWon is between 10 and 20 percent, with some improvements as high as or even exceeding 30 percent. Upgrades may include efficiency improvements, power house upgrades or replacements, line assessments, distribuWon lines to new customers, demand-side improvements, heat recovery and repairs to generaWon and distribuWon systems. RURAL POWER SYSTEM UPGRADE 81 RPSU projects completed since 2000 Kipnuk power house in 2004. A new power house module for Kipnuk is currently under construc:on by AEA contractors. ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 5 Rural Alaska is energized primarily by liquid fuels: diesel for power generaWon and heaWng, and gasoline for transportaWon. Rural villages are located either along rivers or on the coast, so fuel is primarily delivered by barge. Where barge deliveries are unavailable or uneconomic, air tankers and, in a few cases, tanker trucks deliver fuel. Delivery is seasonal and limited by sea or river ice, water levels, or ice road availability. Villages of a few hundred people must store hundreds of thousands of gallons of fuel to meet their annual energy needs. Many of rural Alaska’s bulk fuel faciliWes were built in the 1950-60s or earlier. They were not built to naWonal standards or in compliance with current regulaWons, and some of them are at the end of their useful lives. Yet they conWnue in service unWl upgraded or replaced, in some cases posing risks to personal safety and the surrounding environment. AEA’s Bulk Fuel Upgrade (BFU) program builds and repairs code-compliant fuel storage faciliWes in Alaska communiWes under 2,000 people. These faciliWes help decrease the per-unit cost of fuel by allowing the community to purchase in bulk quanWWes. Moreover, the faciliWes protect local public health and the environment by prevenWng spills and contaminaWon. In the last 15 years, AEA has performed 111 bulk fuel upgrades, and another 20 are currently in design or construcWon. BULK FUEL UPGRADE 111 bulk fuel projects completed since 2000 ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 6 The Power Cost EqualizaWon (PCE) program provides economic assistance to communiWes and residents of rural electric uWliWes where the cost of electricity can be three to five Wmes higher than for customers in more urban areas of the state. The program’s purpose is to equalize power costs to near the average cost of power in Anchorage, Fairbanks and Juneau. ResidenWal and community facility buildings in nearly 200 communiWes are eligible for the reduced rate. The Regulatory Commission of Alaska (RCA) determines if a uWlity is eligible to parWcipate in the program and calculates the rate that PCE program reimburses each eligible uWlity. AEA determines eligibility of community faciliWes and residenWal customers and provides reimbursement to the electric uWlity for the PCE credits extended to customers. The PCE program is funded by earnings of the PCE Endowment Fund. AS 42.45.085 provides that five percent of the PCE Endowment Fund’s three-year monthly average market value may be appropriated to the PCE program. It has only been in recent years that the five-percent draw on the endowment has been sufficient to fully fund PCE payments. PCE administraWve expenses have historically been supplemented with State general fund dollars. POWER COST EQUALIZATION 83,000 Approximately 83,000 people receive direct benefit from PCE. 191 Communi?es Served by PCE (as of June 2016) 84 U?li?es Served by PCE (as of June 2016) ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 7 Proper maintenance of energy infrastructure is an essenWal component of delivering safe and reliable power to a community. AEA provides training opportuniWes for local residents to learn how to operate and maintain their energy infrastructure and to assist uWliWes to keep their faciliWes code-compliant and managed sustainably. AEA contracts with Alaska VocaWonal Technical Center (AVTEC) in Seward to deliver bulk fuel and power plant operator training courses. AEA also provides in-house training for uWlity clerks about the Power Cost EqualizaWon (PCE) program, Regulatory Commission of Alaska (RCA) reporWng, bulk fuel loan applicaWon process and general accounWng pracWces on an as-available basis. TRAINING In 2016, AEA trained individuals from 25 communi?es in power plant opera?ons and 15 in bulk fuel opera?ons. 40 COMMUNITIES Angoon power house operator training on new power house module during construc:on ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 8 AEA’s Circuit Rider program provides eligible uWliWes with technical assistance to improve the efficiency, safety and reliability of their power systems and helps reduce the risk and severity of emergency condiWons. AEA staff instructs the rural uWlity operators and managers in the proper operaWons and maintenance of their generaWon and distribuWon infrastructure. Power generaWon includes convenWonal diesel and alternaWve sources (e.g. hydro and wind). Technical staff can help with diagnosing and troubleshooWng through real-Wme, remote monitoring, or provide on-site training, technical consultaWon, assistance and minor repairs. The program does not replace the uWlity’s necessary operaWons and maintenance budget or provide funding for major repairs or reconstrucWon of uWlity systems but augments these efforts. This program is available for rural Alaska communiWes with a populaWon less than 2,000. AEA also provides assistance by providing informaWon regarding available programs and resource opWons to maximize benefit to the community. AEA personnel act as a liaison between local governments and state and federal agencies and may assist with navigaWng complex applicaWon processes. CIRCUIT RIDER AND TECHNICAL ASSISTANCE ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 9 “Electrical emergency" is a condiWon in a uWlity's system that presents an imminent danger to life or likelihood of significant disrupWon of electrical service. AEA responds to a real or potenWal emergency situaWon before disaster or major loss occurs. Emergency response can ulWmately be preventaWve in nature, adequately restoring power before loss of life or property. Electrical emergency response includes the repair of exisWng infrastructure or the procurement and/or installaWon of new equipment including engines, generators and transformers. The Electrical Emergency Response program, combined with other criWcal AEA rural programs, have led to a significant decrease in the annual number of costly catastrophic electrical emergencies over Wme. Catastrophic electrical emergencies are those that incur loss of property or life, and include situaWons in which the power generaWon facility is destroyed to the point it must be completely replaced. ELECTRICAL EMERGENCY ASSISTANCE In 2016, AEA responded to seven electrical emergencies. The most recent catastrophic power house failure was in 2011. 7 Birch Creek power house fire, 2011 ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 10 STATEWIDE PROGRAMS The following are programs and projects available to all communi?es in Alaska but focus on those with high energy costs, which are primarily rural. ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 11 Energy efficiency is a low-cost energy soluWon that is both quick to deploy and available in every community in the state. When taking a whole community approach to energy soluWons, building efficiency improvements are usually the most highly prioriWzed acWon to reduce community energy costs. The Energy Efficiency program at AEA leverages federal State Energy Program (SEP) formula funds and has three primary components: 1. The Village Energy Efficiency Program (VEEP) provides grants to improve efficiency in public and community buildings in rural communiWes with high energy costs. 2. Alaska Energy Efficiency Partnership is an ad hoc group of more than 50 uWliWes, advocacy groups, federal, state, regional and local government and tribal enWWes that meet quarterly to share informaWon, discuss policy and best pracWces, as well as idenWfy opportuniWes for collaboraWon. 3. The third component focuses on the development of financing markets and mechanisms to use an increasingly larger share of private dollars to complete efficiency projects in both urban and rural Alaska. These efforts include work with building owners, the commercial lending community and evaluaWon of policies to facilitate private investment in efficiency like the Property Assessed Clean Energy (PACE) legislaWon and the use of federal Energy Efficiency ConservaWon Loan Program (EECLP) funds. ENERGY EFFICIENCY FACT: The recently completed Alaska Affordable Energy Strategy iden?fied building efficiency, par?cularly in non-residen?al buildings, as the most abundant and cost-effec?ve way to lower energy costs in communi?es outside the Railbelt region. Between 2005 and 2016, AEA performed energy efficiency improvements to public buildings in nearly 150 small Alaska communi?es. 150 ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 12 AEA’s Hydro program includes run-of-river and storage hydroelectric, ocean and wave energy. Due to budget consideraWons, this program is focused on convenWonal, run-of-river and storage hydropower, which are the most mature and economical of the hydro technologies. Early- stage hydro project development is needed to provide the business case to, and reduce the risk for, investors and communiWes in order to advance projects through construcWon with private financing and/or grant funds. A new program objecWve for 2017 is to establish a statewide hydro working group which will prioriWze communiWes for stream gauging, a necessary iniWal step to idenWfy potenWal hydro resources. AEA provides hydro-related technical support to approximately 20 communiWes in Alaska annually. AEA staff provide technical assistance to AEA's Power Project Fund loan program and long-term protecWon of the State's investments in many built and developing hydro projects, such as the Hiilangaay project (formerly Reynolds Creek) on Prince of Wales Island. This technical support helps ensure technical and economic viability of projects by idenWfying and addressing risks through all stages of project development, from reconnaissance through construcWon and commissioning. Ocean and wave energy technologies are also monitored by this program but smaller budgets and reduced staff have eliminated previously funded early-stage work in these developing arenas. HYDRO Per the Governor’s June 2016 direc?ve, AEA is wrapping up work associated with the Susitna-Watana Hydroelectric Project with an emphasis placed on preserving the State’s investment to date. Most of that investment consists of determining the engineering and economic feasibility of the project and extensive environmental data collec?on and analysis, which is stored and publicly accessible online. AEA is currently awai?ng Federal Energy Regulatory Commission (FERC)’s study plan determina?on, expected in early March 2017; FERC will put the project licensing effort into abeyance following the determina?on. Susitna-Watana Hydro Status Humpback Creek Hydro, Cordova ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 13 AEA’s Wind program has recently re-established the Alaska Wind Working Group (AWWG), a steering commitee comprised of uWliWes, private developers, naWonal labs, NGOs and others to guide the development of wind projects in Alaska. The wind program focuses on assisWng communiWes to idenWfy wind resources that could result in economical projects and on opWmizing performance of exisWng systems. Early-stage development is necessary to provide the business case to, and reduce the risk for, investors or communiWes to advance projects through construcWon with private financing or grant funds. The program objecWves for 2017 are to provide meteorological towers (to measure the wind resource) for up to four Alaska communiWes and to work with the AWWG to improve performance of exisWng wind systems. Technical support is provided to approximately 40 communiWes in the state annually. As a result of budget and staff reducWons, research work has ceased; recent research focused on wind tower foundaWons in permafrost during winter warming trends and the impact of icing on wind performance. While this research is important to help maximize the State's investment, reducWon in State funding has limited this work. ExisWng work is more directly applied to helping communiWes reduce energy costs through economical wind development and by maximizing generaWon of exisWng infrastructure WIND ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 14 AEA, through its Biomass program, is the lead agency of the Alaska Wood Energy Development Task Group (AWEDTG). The AWEDTG is a collaboraWon of 20 state, federal, tribal and non-governmental organizaWons that provides educaWon about the benefits of biomass and works with communiWes to develop successful projects. Funding for this effort comes from State of Alaska funds that leverage grants from the U.S. Forest Service. In 2017, the AWEDTG is targeWng compleWon of six to 10 pre-feasibility studies, technical support in over 25 communiWes with high energy costs, as well as one technical training workshop. In total, the AWEDTG has completed over 150 pre-feasibility studies for over 70 communiWes in Alaska and provided technical support in over 100 communiWes. Thirty-two biomass systems are operaWng in Alaska as a result of this work. At least 15 systems are currently under construcWon. Prince of Wales Island, Ketchikan and the Tok area have also developed regional wood supply economies supporWng mulWple wood energy systems. BIOMASS 100,000 More than 100,000 cords of wood are used annually for home hea?ng statewide. 53 Renewable Energy Fund biomass projects funded since the REF program began in 2008. pre-feasibility studies have been conducted statewide since 2005. Mentasta biomass 150 ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 15 The Heat program is a consolidaWon of many former programs recognizing AEA's smaller staff and reduced budgets. The program encompasses heat recovery, heat pumps (ground, air and ocean-source heat pumps), solar thermal, geothermal, biomass, biofuels and all other alternaWve energy heat sources. Technical support is provided to approximately 40 Alaska communiWes annually. Support for early-stage development is necessary to establish a business case for projects, reducing the risk for investors and communiWes as they advance projects with private financing or grant funding. This program has developed and tested a heat recovery unit, or “marine manifold,” for use on a diesel engine commonly found in rural power houses. That marine manifold is now being added to power houses around the state to capture and use previously wasted heat energy. This level of research is unlikely to occur with smaller budgets, so efforts are focusing on preparing projects for financing and implementaWon. HEAT 74 More than 74 communi?es use recovered heat from power plants to heat community buildings/ facili?es. 23 Renewable Energy Fund heat recovery projects funded Quinhagak heat recovery AEA funded the Quinhagak Heat Recovery project from the Renewable Energy Fund. Alaska Na?ve Tribal Heath Consor?um (ANTHC) built the project for the rural village of Quinhagak. CRW Engineering was hired to design the project and received the E-Week People’s Choice Award for the project's engineering in February 2016. This project will provide recovered heat from the exis?ng electrical power plant to the washeteria and combined u?lity building. The es?mated fuel oil savings to the combined u?lity building and washeteria is projected to be 14,200 gallons per year, which, at $3.23 per gallon for hea?ng fuel (2016) equates to a total offset value of approximately $46,000. Quinhagak Heat Recovery: Award-winning energy savings ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 16 From 2008 to 2015, appropriaWons totaling $257 million were made for Renewable Energy Fund (REF) projects. This funding has been matched with hundreds of millions of dollars in funding from local and other government sources to develop projects that reduce and stabilize the cost of energy in Alaska communiWes through development of renewable energy projects for heat and electricity. In 2016, operaWonal REF projects displaced an esWmated 31 million diesel equivalent gallons, saving communiWes an esWmated $63 in that year alone. The State’s investment through the REF idenWfied and evaluated renewable potenWal across the state and jumpstarted a renewable energy industry in Alaska, the benefits of which will be felt for decades to come. RENEWABLE ENERGY FUND 40% + More than 40 percent of all opera?ng REF projects are heat projects. 857,875 metric tons From 2009 to 2016, REF projects have eliminated 857,875 metric tons of C02. There are REF projects in every region of the state. Collec?vely, opera?onal REF projects have a benefit cost ra?o of 2.51 Allison Creek Hydro, Copper Valley Electric Associa:on ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 17 The Emerging Energy Technology Fund (EETF) was created by the Alaska State Legislature in 2010 to promote the expansion of energy sources commercially available to Alaskans. Projects can test emerging energy technologies or methods of conserving energy; improve an exisWng technology; or deploy an exisWng technology that has not previously been demonstrated in the state. EETF grants must be used for demonstraWon projects of technologies that have a reasonable expectaWon of becoming commercially viable within five years. Energy technology can include technologies related to renewable sources of energy, conservaWon of energy, enabling technologies, efficient and effecWve use of hydrocarbons and integrated systems. Two compeWWve rounds of EETF funding (2012 and 2013) have successfully launched projects demonstraWng a broad range of emerging energy technologies, including batery and flywheel energy storage, river hydrokineWc devices, new heat pump systems, efficient diesel generaWon and novel wind turbines. Projects funded under the program will record performance data throughout the demonstraWon period for independent review. A third solicitaWon for applicaWons in 2016 prioriWzed microgrid- enabling technology. Helping to mature these types of technologies could increase renewable penetraWon in all rural microgrids with diesel-renewable hybrid systems, which would have potenWal widespread applicability and benefit throughout Alaska. EMERGING ENERGY TECHNOLOGY FUND Federal funds awarded to AEA specifically for emerging technology allowed for a third round of funding in 2016. ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 18 RAILBELT AEA plays a leading role in energy planning and project implementa?on within the Railbelt region, as an owner of both genera?on and transmission infrastructure and through the agency's par?cipa?on in collabora?ve management of these assets with Railbelt electric u?li?es. ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 19 TRANSMISSION OWNERSHIP: THE ALASKA INTERTIE The Alaska InterWe transmission line is a 170-mile long, 345 kV transmission line between Willow and Healy that is owned by AEA and operates at 138 kV. The InterWe interconnects Golden Valley Electric AssociaWon (GVEA), the regulated uWlity that serves areas north of the Alaska Range, with Southcentral Alaska uWliWes. Although the Alaska InterWe allows resources north and south of the range to be shared to improve reliability, the GVEA storage batery and generaWon resources have been used to send emergency power south to minimize catastrophic network- wide outages. Constructed in the mid-1980s with $124 million in State of Alaska appropriaWons, this AEA-owned asset is associated with no debt. There are significant cost savings resulWng from the exchange of economy energy and sharing of reserve generaWon capacity between the Anchorage and Fairbanks load centers. Once esWmated to be $17 million in annual monetary benefit, GVEA ratepayers achieved savings in excess of $52 million in 2012. In the past year, the State has completed construcWon of a StaWc Var Compensator (SVC) Project, a $15 million Project which ensures the stability of this important State asset. The operaWon of the InterWe is governed by the Alaska InterWe Agreement entered into in 1985, amended in 1991 and again in 2011. The parWes to this agreement are AEA, GVEA, Municipal Light & Power, Chugach Electric and Matanuska Electric AssociaWon. Each of these enWWes also has a seat on the InterWe Management Commitee (IMC), the enWty with the responsibility for operaWng and managing the Alaska InterWe. Through AEA’s leadership role as a member of the IMC and the only parWcipaWng member with step-in rights on financial decisions regarding the interWe, AEA is uniquely posiWoned to ensure that ratepayers for the enWre electrically interconnected Railbelt region are treated similarly, without regard to a specific uWlity’s individual service territory. ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 20 POWER GENERATION OWNERSHIP: BRADLEY LAKE HYDROELECTRIC FACILITY The Bradley Lake Hydroelectric Project is located 27 air miles northeast of Homer on the Kenai Peninsula and has 120 MW of installed capacity. The project consists of a 125- foot high, concrete-faced, rock-filled dam structure; three diversion structures; a 3.5-mile long power tunnel and verWcal shaw; generaWng plant; interior substaWon; 20 miles of transmission line; and a substaWon. The power generaWon potenWal of Bradley Lake was first studied by the U.S. Corps of Engineers in 1955. AEA, then the Alaska Power Authority, assumed responsibility for the project in 1982. The project was declared in commercial operaWon on Sept. 1, 1991 and has been producing power since. Total project costs, including major capital improvements as of June 30, 2015, are $328 million. The project was funded through legislaWve appropriaWons and AEA revenue bonds that are being repaid by the parWcipaWng uWliWes. Bonds are expected to be reWred in July 2020, awer which the parWcipaWng uWliWes will be obligated to pay AEA up to $12.5 million annually for deposit into the Railbelt Energy Fund. The Bradley Lake Project Management Commitee (BPMC) generally manages the project, subject to AEA’s non-delegable rights, duWes and responsibiliWes. Through the State’s parWcipaWon on the BPMC, the parWcipants are invesWgaWng the potenWal to divert waters of Batle Creek into the Bradley Lake reservoir. This project will increase Bradley Lake Hydro electricity producWon approximately 37,300 MWh, or about 10 percent. The project includes construcWon of three miles of road and a concrete diversion dam, and a 5-foot pipe under the road to convey the water to Bradley Lake. The capital construcWon cost esWmate is less than $40 million. AquaWc studies were performed on lower secWons of Batle Creek for two years. No fish have been found within several miles of the diversion site, but are present near Wdewater. It is thought that the project could have a posiWve impact on salmon through the removal of the summer glacial water and moderaWon of flows. ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 21 PLANNING & POLICY AEA's planning and policy work includes regional and statewide energy planning, as well as policy research, analysis and stakeholder support. ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 22 In 2016, AEA completed Regional Energy Plans throughout the state. The agency contracted with Alaska Regional Development OrganizaWons (ARDORs) and other regional enWWes to idenWfy energy prioriWes and a regionally-driven blueprint for energy sustainability. The Regional Energy Plans provide a concrete, implementable and fundable energy plan that addresses electricity, heaWng and transportaWon energy needs. Each region crawed a specific and acWonable plan to work toward an affordable, reliable, efficient and sustainable energy future. AEA conWnues to provide technical assistance to regional energy planners, community energy champions and local energy working groups that were established as a part of the planning effort. Many regions are moving forward with projects and programs idenWfied through the planning process. ImplementaWon of the regional energy plans is long-term, ongoing work which AEA will conWnue to support by providing technical, financial and evaluaWon assistance. REGIONAL PLANNING Regional energy planning work session, Bethel ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 23 The Alaska Affordable Energy Strategy (AkAES) fulfills the legislaWve mandate set out as part of Senate Bill 138 (SB138) in 2014. SB138 required that AEA develop a “plan and recommendaWons to the legislature on infrastructure needed to deliver affordable energy to areas in the state that do not have direct access to a North Slope natural gas pipeline.” The AkAES proposes changes in the current system for how the State idenWfies and finances cost- effecWve projects, and provides accountability and funds programs. In addiWon to recommendaWons for improving the delivery of energy programs and services, the AkAES also included the creaWon of the Alaska Affordable Energy Model (AkAEM). With appropriate, regular data collecWon and updates, the AkAEM will be a valuable planning tool into the future. The model is a reconnaissance-level economic analysis tool that allows the comparison of different types of community-scale efficiency, generaWon and heaWng projects. ALASKA AFFORDABLE ENERGY STRATEGY Safe, Reliable, Stable & Affordable Energy A. Iden?fica?on B. Project Financing D. Funding Programs C. Accountability & Sustainability Collabora?on, stakeholder engagement & comprehensive research 150 AkAES references more than 150 reports and ar?cles. 3,000 The Alaska Affordable Energy Model provides reconnaissance-level economic analysis of more than 3,000 poten?al projects in communi?es. ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 24 LOOKING AHEAD Though the State has less money to spend on capital projects, there is s?ll abundant energy cost-saving opportuni?es that can be brought to frui?on through strategic project planning and crea?ve financing solu?ons. AEA is focusing efforts to guide project development; act as a project funding and financing conduit; and con?nue to provide cri?cal technical assistance as Alaska's Energy Solu?ons Center. ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 25 The project development and finance group at AEA provides direct assistance to communiWes to help them transiWon to financially sustainable energy systems without grant-funded assets. AEA works with communiWes to bring good projects to the point of financing through methods other than state grants, e.g. federal grants or loans. In its first year in 2017, AEA is targeWng unfunded REF projects that are good ventures but did not receive funding. This effort should create a pipeline for well-developed Power Project Fund (PPF) loan applicaWons. The PPF loan program provides loans to uWliWes, local governments, tribes and independent power producers for the development or improvement of power generaWon faciliWes, including renewable and non-renewable, supply- side conservaWon, heat recovery and bulk fuel storage. Loan terms can match the expected useful life of the project and interest rates are set between tax-exempt at the high end and zero at the low end. The PPF program is designed to be flexible enough to meet community needs, providing an atracWve financing opWon for conWnued investment in local energy infrastructure. The project development and finance group works in concert with local, regional and statewide planning efforts to bring financial and other resources to bear to meet idenWfied needs. In addiWon to responding to areas of need idenWfied at the local level, this group tracks potenWal funding opportuniWes (e.g. federal and private grants and iniWaWves) and works to put those funds to work in Alaska. PROJECT DEVELOPMENT & FINANCE Waterfall Creek Hydro in King Cove is a good example of a project brought to bear by mul?ple sources. This project received grant funding from the Renewable Energy Fund, a loan from the Power Project Fund, bonding through the State bond bank and local match to create the financing package needed to complete their project. This is the type of dynamic capital stack that will be needed increasingly more in the future to bring projects to frui?on with less reliance on state and federal grant funding as has been historically received. AEA's in-house technical, financial and project management exper?se across a range of energy project types allows the agency to provide communi?es and u?li?es assistance with iden?fying, developing and financing cri?cal energy projects. Perryville, 2016 ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 26 FINANCIALS ALASKA ENERGY AUTHORITY 2016 ANNUAL REPORT / PAGE 27 BALANCE SHEETS June 30, 2016 June 30, 2015 Assets:    Investment securities and cash $ 1,118,052        $ 1,167,953          Loans, net 6,312               6,347                  Capital assets, net 370,154          368,160             Receivables and other assets 7,774               15,734                   Total Assets 1,502,292       1,558,194       Liabilities and net position: Liabilities    Bonds payable 62,585             71,155                Payables and other liabilities 44,530             60,232                   Total liabilities 107,115          131,387          Net position:1,395,177       1,426,807             Total liabilities and net position $1,502,292        $ 1,558,194       Alaska Energy Authority UNAUDITED FINANCIAL HIGHLIGHTS (in thousands) Alaska Energy Authority: Unaudited Financial Highlights (in thousands) For AEA’s complete FY16 Audited Financial Statements, go to akenergyauthority.org or call 907.771.3000. Operating revenues:    Federal grants $ 4,357               $ 4,734                   Revenue from operating plants 18,640            16,828                 State operating revenues 18,943            34,116                 Interest on loans 291                 282                      Other operating revenues 43                   18                           Total operating revenues 42,274            55,978              Operating expenses:    Grants and projects 37,918            75,056                 Power cost equalization grants 31,198            36,663                 Interest expense 3,177              3,668                   Plant operating 4,709              3,985                   General and administrative 6,590              6,113                   Provision for loan losses (2)                    6                           Depreciation 10,529            10,487                 Other project expenses ‐                  ‐                          Total operating expenses 94,119            135,978           Operating loss (51,845)          (80,000)            Investment Income, net 11,048            35,095              State of Alaska Fund Capitalization 9,167              65,489              Other non‐operating losses ‐                  30                     Increase (decrease) in net position $ (31,630)           $ 20,614              REVENUES, EXPENSES, AND CHANGES IN NET POSITIONJune 30, 2016 June 30, 2015 BALANCE SHEETS REVENUES, EXPENSES AND CHANGES IN NET POSITION June 30, 2016 June 30, 2015 813 West Northern Lights Blvd. Anchorage, Alaska 99503 Phone: (907) 771-3000 Fax: (907) 771-3044 www.akenergyauthority.org Toll Free (Alaska Only) 888-300-8534 AEA’s mission: Reduce the cost of energy in Alaska.