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HomeMy WebLinkAboutS Intertie report 6-2000 CHUGA<n POWERING ALASKA’S FUTURE Hee June 30, 2000 Snaoaa- He o)EGEIVE |) JUL ~ 3 2000 Alaska Industrial Development and Export Authority Mr. Randy Simmons Executive Director Alaska Industrial Development and Export Authority 480 West Tudor Road Anchorage, Alaska 99503-6690 Subject: Southern Intertie Monthly Report for June 2000 W.0.#E9590081 Dear Mr. Simmons: Please find enclosed 1 (one) copy of the Southern Intertie Report for the Month of June 2000. If there are any questions, please contact Dora Gropp, (907) 762-4626. Eugene N- Bjornstad General Manager Sincerely, ENG/I$9G:ah Enclosures: 1 (one) copy of Southern Intertie Monthly Report c: Lee Thibert Michael Massin Dora Gropp Jim Borden Mike Cunningham Don Edwards W.0.#E9590081, Sec., 2.1.3 RF Chugach Ele 5601 Minnesota Drive, P.O. Box 196300, An Fax (907) 562-0027 © (800) 478-7494 CHUGACH ELECTRIC ASSOCIATION, INC. Anchorage, Alaska SOUTHERN INTERTIE Phase IC — EIS MONTHLY REPORT for June 2000 5601 Minnesota Drive / 99518 P.O. Box 196300 Anchorage, Alaska 99519-6300 II. III. SUMMARY FINANCIAL Ie 2 3. 4. SCHEDULE TABLE OF CONTENTS Bank Statement of May 2000 Chugach Statement for May 2000 Total Project Expenditures, Inception through May 2000 Chugach Activity Summary for May 2000 1. Project Schedule ITEMS FOR APPROVAL None. ITEMS FOR DISCUSSION None. ITEMS FOR INFORMATION is Ds POWER Engineers’ Monthly Report dated June 16, 2000 Single Audit Report of for “State Financial Assistance Reports, Year ended December 31, 1999”. Letter to AIDEA, Funding Requirements, dated June 21, 2000 I. SUMMARY The draft of the Preliminary Draft Environmental Impact Statement (PDEIS) has been received from RUS/Mangi on June 13, 2000. The document, based on the Environmental Analysis submitted by our consultants, identifies numerous areas, where additional information may be needed. Review meetings are tentatively scheduled for August 2 to 4, 2000, in Seattle, Washington and will address these issues and determine how they should be dealt with. Impacts to budget and schedule pending on the outcome of these meetings cannot be fully addressed until the lead and cooperating federal agencies have agreed on how to finalize the DEIS. At this time we do not anticipate the DEIS to be published until October or November of this year or later. We are concerned over the monetary and timing effects that the clarifications and ensuing delays will have. Our consultants have exhausted the funding which was intended to cover all efforts to the DEIS publication. Depending on further work required as a result of the PDEIS review by the federal agencies, we estimate that as much as $800,000 in additional funds may be necessary to publish the DEIS. We will have to be prepared at that time to authorize our consultants to respond to clarification or additional study requests raised by the agencies as a result of the review. The IPG authorized Chugach to request release of additional funds in the amount of $1,600,000 for the EIS support work from AIDEA at its June 20, 2000 meeting. The group also authorized adding funding to the IPG consultant’s contract to assist in the completion of the NEPA work. After the DEIS is published and public comments are received, additional work may be required for the preparation of the final EIS (FEIS). Funding for that effort is presently estimated to require another $800,000, bringing the total for the environmental work to about $7,500,000. Expenditures for Phase IC (EIS) of the project stand as follows: DESCRIPTION POWER |COE/USFWS/| CHUGACH TOTAL ENGINEERS RUS ORIG. BUDGET $389,547 $160,000 $100,000 $649,547 ALLOCATED $38,955 $0 $0 $38,955 [CONTINGENCY | TOTAL $428,502] $160,000] $100,000] $688,502] AMENDMENTS $0} $0 $0 $0 TOTAL COMMITMENT $428,502] $160,000 $100,000 $688,502 SPENT TO DATE $155,905] $99,034 $57,541 $312,480 % OF TOTAL 36%] 62% 58% 45% Total Project expenditures as of 06/17/00 are $5,416,780. I. FINANCIAL 1. Bank Statement of May 2000 2. Chugach Statement for May 2000 3. Total Project Expenditures, Inception through May 2000 4. Chugach Activity Summary for May 2000 Southern Intertie Grant Fund Bank Account Activity Summary May, 2000 April Ending Balance Forward Total Deposits Total Withdrawals Interest Earned Balance May 31, 2000 Southern intertie bank activity.xis $580,949.71 $0.00 ($20,522.08) $3,157.60 $563,585.23 06/09/2000 DATE: 05/31/00 ACCOUNT: 41100¢ TaN EC we) eevee a eee ge Ss \ Halesdabsestsberrol[MolseeDMosssllellaselbssolbeestdsateaal CHUGACH ELECTRIC ASSOCIATION Li 30 PO BOX 196300 oO ANCHORAGE AK 99519-6300 0 MAIN BRANCH PO BOX 100720 ANCHORAGE AK 99510-0720 DESCRIPTION DEBITS CREDITS DATE BALANC BALANCE LAST STATEMENT -----+-+--+- Arsrenelisie elsllelie] sielierere Sec woe oes 04/26/00) 580,949.7: INTEREST 281.04 05/01/00 581,230.75 INTEREST 95.43 05/02/00 581,326.1E INTEREST 95.45 05/03/00 581,421.6: INTEREST 95.46 05/04/00 581,517.0¢ INTEREST 95.48 05/05/00 581,612.5°" INTEREST 290.57 05/08/00 581,903.14 INTEREST 99.63 05/09/00 582,002.7% INTEREST 99.64 05/10/00 582,102.41 INTEREST 99.66 05/11/00 582,202.07 INTEREST 99.68 05/12/00 582,301.75 TRANSFER TO BUSINESS ACCOUNT 1106061 20,522.08 05/15/00 561,779.67 INTEREST 296.27 05/15/00 562,075.94 INTEREST 96.94 05/16/00 562,172.88 INTEREST 96.96 05/17/00 562,269.84 INTEREST 96.97 05/18/00 562,366.81 INTEREST 96.99 05/19/00 562,463.80 INTEREST 286.93 05/22/00 562,750.73 INTEREST 92.97 05/23/00 562,843.70 INTEREST 92.98 05/24/00 562,936.68 INTEREST 93.00 05/25/00 563,029.68 INTEREST 93.02 05/26/00 563,122.70 INTEREST 370.78 05/30/00 563,493.48 INTEREST 91.75 05/31/00 563,585.23 BALANCE THIS STATEMENT -.-.----- Sloe boxe is Io tas] S Shct lente ereleteeneiers 05/31/00 563,585.23 Yv¥UU UL OO PAGE: DATE: 05/31/00 ACCOUNT: 41100 First National Bank Cee etd Member FDIC CHUGACH ELECTRIC ASSOCIATION NON FEDERALLY INSURED REPURCHASE AGREEMENT ACCOUNT 41100033 TOTAL CREDITS (22) 3,157.60 TOTAL DEBITS (1) 20,522.08 INTEREST THIS STATEMENT 3,157.60 INTEREST PAID 2000 14,611.53 - END OF STATEMENT —- LENDER CHUGACH ELECTRIC ASSOCIATION, INC. Anchorage, Alaska 06/09/00 TO: Dora Gropp - Manager, Transmission & Special Projects a) FROM: we Debra Williams, Plant Accountant SUBJECT: 9590081 - Southern Intertie Route Selection Study You had previously requested establishment of this work order to study route selection for the Southern Intertie for the Intertie Participants Group. The Association will be reimbursed for charges to this work order. The following charges occurred during May 2000. Direct Labor 1,912.80 Indirect Labor 1,008.41 Power Engineers - Invoice 72804 54,689.22 Heller, Ehrman White & McAuliffe-Invoice 14960 503.38 Sub-Total $58,113.81 General, Administrative & Construction Overhead (0.5%) 290.57 Total Charges $58,404.38 Please review the attached backup and indicate your concurrence below if you are in agreement that these charges are correct for this work order and time period. As per your request, | will keep the original in the work order file. Concur: doy x. Kiy/) 6 Le Zo) Signatire ate djw Attachments CHUGACH ELECTRIC ASSOCIATION, INC. Southern Intertie Transactions Inception Through May 31, 2000 Project Expenditures Direct Labor Indirect Labor Power Engineers Miscellaneous Total Grant Fund Expenditures Direct Charges that Chugach has been Reimbursed for Plus General, Administrative & Construction Overhead Total Amounts Paid to Chugach Year to Date Month Inception Through Ended Inception Through 12/31/99 05/01/2000 05/31/2000 Through 05/31/2000 $161,821.62 $11,276.14 $1,912.80 $175,010.56 61,566.25 5,391.63 1,008.41 67,966.29 4,719,774.90 54,980.64 54,689.22 4,829,444.76 308,282.24 3,841.02 503.38 312,626.64 $5,251,445.01 $75,489.43 $58,113.81 $5,385,048.25 Year to Date Month Inception Through Ended Inception Through 12/31/99 05/01/2000 05/31/2000 Through 05/31/2000 $ §,251,445.01 $ $ 26,257.22 $ $ §,277,702.23_ $ 75,489.43 $ 377.44 $ 75,866.87 _ $ 58,113.81 290.57 58,404.38 $ 5,385,048.25 $ 26,925.23 $ 5,411,973.48 06/09/2000 —_—— ee 99-00Sinterti.xls Invoice Month Inception-to-Date Date Incurred Costs OH Total Charges Jan-00 Dec-99 13,496.23 67.48 13,563.71 5,250,542.30 Feb-00 Jan-00 3,892.65 19.46 3,912.11 5,254,454.41 Mar-00 Feb-00 9,362.97 46.81 9,409.78 5,263,864.19 Apr-00 Mar-00 41,813.83 209.07 42,022.90 5,305,887.09 May-00 Apr-00 20,419.98 102.10 20,522.08 5,326,409.17 Jun-00 May-00 58,113.81 290.57 58,404.38 5,384,813.55 Jul-0O 0.00 5,384,813.55 Aug-00 0.00 5,384,813.55 Sep-00 0.00 5,384,813.55 Oct-00 0.00 5,384,813.55 Nov-00 0.00 5,384,813.55 Dec-00 0.00 5,384,813.55 Year to Date 147,099.47 735.49 147,834.96 Life to Date 5,357,888.32 26,925.23 5,384,813.55 al USFS Reimbursement is not included in total Grant Fund Expenditures portion of Transaction Spreadsheet. 99-00Sinterti.xis Invoice Month Date Incurred Costs OH Total Dec-95 Jun-Oct 95 22,614.00 113.07 22,727.07 Jan-96 0.00 0.00 0.00 Feb-96 Nov-Dec 95 176,265.61 881.33 177,146.94 Mar-96 Jan-96 7,660.92 38.30 7,699.22 Apr-96 Feb-96 251,912.29 1,259.56 253,171.85 May-96 Mar-96 172,070.45 860.35 172,930.80 Jun-96 Apr-96 127,113.82 635.57 127,749.39 Jun-96 May-96 35,628.41 178.14 35,806.55 Aug-96 Jun-96 40,919.00 204.60 41,123.60 Sep-96 Jul-96 57,116.72 285.58 57,402.30 Oct-96 Aug-96 168,312.54 841.56 169,154.10 Oct-96 Sep-96 202,010.97 1,010.05 203,021.02 Dec-96 Oct-96 171,462.74 857.31 172,320.05 Life to Date 1,433,087.47 7,165.42 _1,440,252.89 Jan-97 Nov-96 234,735.50 1,173.68 235,909.18 Feb-97 Dec-96 306,667.10 1,533.34 308,200.44 Mar-97 Jan-97 5,045.85 25.23 5,071.08 Apr-97 Feb-97 124,380.57 621.90 125,002.47 May-97 Mar-97 177,117.40 885.59 178,002.99 Jun-97 Apr-97 165,814.35 829.07 166,643.42 Jul-97 May-97 158,762.80 793.81 159,556.61 Aug-97 Jun-97 158,786.12 793.93 159,580.05 Aug-97 Jul-97 154,159.15 770.80 154,929.95 Sep-97 Aug-97 243,365.76 1,216.83 244,582.59 Oct-97 Sep-97 193,127.79 965.64 194,093.43 Nov-97 Oct-97 258,833.19 1,294.17 260,127.36 Dec-97 Nov-97 228,435.19 1,142.18 229,577.37 Year to Date 2,409,230.77 12,046.17 _2,421,276.94 Life to Date 3,842,318.24 19,211.59 3,861,529.83 Jan-98 0.00 0.00 0.00 Feb-98 Dec-97 153,179.64 765.90 153,945.54 Mar-98 0.00 0.00 0.00 Apr-98 Jan-98 39,750.15 198.75 39,948.90 Apr-98 Feb-98 49,887.09 249.44 50,136.53 May-98 Mar-98 64,102.85 320.51 64,423.36 Jun-98 Apr-98 7,283.97 36.42 7,320.39 Jul-98 May-98 173,312.97 866.56 174,179.53 Aug-98 Jun-98 59,362.04 296.81 59,658.85 Sep-98 Jul-98 38,793.39 193.97 38,987.36 Oct-98 Aug-98 123,711.01 618.56 124,329.57 Nov-98 Sep-98 19,025.07 95.13 19,120.20 Dec-98 0.00 0.00 0.00 Year to Date 728,408.18 3,642.05 732,050.23 Life to Date 4,570,726.42 22,853.64 —_4,593,580.06 Jan-99 0.00 0.00 0.00 Feb-99 Oct-98 4,729.98 23.65 4,753.63 Nov-98 2,668.64 13.34 2,681.98 Dec-98 63,600.94 318.00 63,918.94 a USFS Refund (27,159.93) 0.00 (27,159.93) Mar-99 Jan-39 55,203.86 276.02 55,479.88 Apr-99 Feb & Mar 99 133,963.88 669.82 134,633.70 May-99 0.00 0.00 0.00 Jun-99 Apr & May 99 175,367.11 876.83 176,243.94 Jul-99 Jun-99 129,717.72 648.59 130,366.31 Aug-99 Jul-99 62,556.06 312.78 62,868.84 Sep-99 Aug-99 9,366.00 46.83 9,412.83 Oct-99 Sep-99 12,455.30 62.28 12,517.58 Nov-99 Oct-99 9,854.56 49.27 9,903.83 Dec-99 Nov-99 7,738.31 38.69 7,777.00 Year to Date 640,062.43 3,336.10 643,398.53 Life to Date §,210,788.85 26,189.74 —_5,236,978.59 Inception-to-Date Charges 22,727.07 22,727.07 199,874.01 207,573.23 460,745.08 633,675.88 761,425.27 797,231.82 838,355.42 895,757.72 1,064,911.82 1,267,932.84 1,440,252.89 1,676,162.07 1,984,362.51 1,989,433.59 2,114,436.06 2,292,439.05 2,459,082.47 2,618,639.08 2,778,219.13 2,933,149.08 3,177,731.67 3,371,825.10 3,631,952.46 3,861 ,529.83 3,861,529.83 4,015,475.37 4,015,475.37 4,055,424.27 4,105,560.80 4,169,984.16 4,177,304.55 4,351 ,484.08 4,411,142.93 4,450,130.29 4,574,459.86 4,593,580.06 4,593,580.06 4,593,580.06 4,598,333.69 4,601,015.67 4,664,934.61 4,637,774.68 4,693,254.56 4,827,888.26 4,827,888.26 5,004, 132.20 5,134,498.51 5,197,367.35 5,206,780.18 5,219,297.76 5,229,201.59 5,236,978.59 99-00Sinterti.xIs Chugach Electric Association, Inc. Southern Intertie Activity Summary May, 2000 Beginning Grant Chugach Ending Bank Funds Interest Invoices Bank Year Balance Received Earned Paid Balance 1996 0.00 2,771,277.00 40,361.59 (1,440,252.89) 1,371,385.70 1997 1,371,385.70 1,346,934.00 67,734.96 (2,421,276.94) 364,777.72 1998 364,777.72 525,214.00 19,424.02 (732,050.23) 177,365.51 1999 177,365.51 988,194.64 19,242.66 (646,398.53) 538,404.28 2000* 538,404.28 100,000.00 14,611.53 (89,430.58) 563,585.23 Total 5,631,619.64 146,763.23 (5,239,978.59) * Through April 2000 bank statement (does not include Chugach invoices for charges incurred in April 2000) Southern Intertie AIDEA mtg.xls 06/09/2000 I. SCHEDULE I. Project Schedule CHUGACH ELECTRIC ASSOCIATION ANCHORAGE - KENAI INTERTIE Mon 6/19/00 PHASE IB 1995 1996 1997 1998 1999 2000 2001 ID | Task Name % Comp. | Q2 | Q3 | a4] ai [a2] a3 [a4 | at [a2 [a3] a4 [ar ]a2] a3] a4 | ai [a2] a3[as {at | a2] a3] a4 [ai [a2] a3 1 | ENVIRONMENTAL & ENGINEERING a ae a SE a, 2 PROJECT MANAGEMENT fo 3 ROUTE SELECTIONSTUDIES | 100% he es 4 | EVAL & PREL_ENGINEERING 100% 5 | EIS PREPARATION 37% 6 ~ DEIS. 50% | 7 | COMMENTPERIOD | 0% 8 FEIS. OO - 0% 9 |AGENCIES a 61% | 10; USFWS 50% | 41.| RUS 60% 12 | USFS — — | 100% | 13 | ROD a : 0% | Task oles Up task = Project Summary ny Project: ANCHORAGE - KENAI INTE | Progress Rolled Up Milestone (> Split Date: Mon 6/19/00 Milestone ¢ Rolled Up Progress C/N = Rolled Up Split. Summary ey External Tasks PH_IC.MPP Page 1 IV. ITEMS FOR APPROVAL None. V. ITEMS FOR DISCUSSION None. VI. ITEMS FOR INFORMATION i POWER Engineers’ Monthly Report dated June 16, 2000 2. Single Audit Report of for “State Financial Assistance Reports, Year ended December 31, 1999”. 3. Letter to AIDEA, Funding Requirements, dated June 21, 2000 SOW June 16, 2000 RE CEIVE D ENGINEERS Ms. Dora Gropp JUN 19 2000 Chugach Electric Association SSION & 5601 Minnesota Drive, Building A TRANS MS ROJECT Anchorage, AK 99518 SPEC Subject: POWER Project #120376 EIS & Preliminary Engineering Chugach Contract No. 820, Monthly Status Report No. 17 For Period May 14 — June 10, 2000 Dear Dora: This report summarizes the activities completed for Task 10 during the reporting period. We have been essentially on hold during the reporting period pending receipt of the PDEIS for review. Work completed this period has included our coordination of activities between the project team and project reporting. The attached Project Summary Report spreadsheet is based on the Amendment No. 2 authorized budget. Included with this monthly status report are Daily Activity Logs for each person with time to the project for this invoicing period. The Environmental Planning Group (EPG) has also submitted activity logs that are included with this report. At this time we have not yet received invoices or activity logs from Michael L. Foster and Associates (MLFA). This report includes the following attachments: 1) Overall Financial Project Summary 2) Project Summary Report by Task 3) Daily Activity Logs Schedule: The schedule, under the control of RUS, continues to be a moving target. In February notice was received from RUS that Mangi would not be able to complete the EIS on the schedule attached to the MOU as agreed upon in December, which called for completion of the DEIS by June 2, 2000. Then, a new schedule was proposed by RUS/Mangi that would result in a Draft PDEIS by May 12, 2000, the PDEIS by July 19, 2000, and the DEIS published by August 31, 2000. RUS/Mangi stated that their proposed revised schedule was contingent on the applicant providing responses to Mangi’s questions as received in February by April 21, 2000. POWER Engineers 44corporated ES 3940 Glenbrook Dr. * P.O. Box 1066 Phone (208) 788-3456 Hailey, Idaho 83333 Fax (208) 788-2082 Chugach Electric Association June 16, 2000 Page 2 We did complete the responses to Mangi’s questions by April 21. In the email from Larry Wolfe dated May 3, we learned that we could expect to receive the PDEIS for review and comment on June 2, 2000. Later in May, that date was pushed back to June 7. We received the PDEIS on June 14. Budget: Task 10 Budget $389,547 Task 10 Billed Through Previous Invoice $134,523 Task 10 Billed This Invoice $ 21,384 Task 10 Remaining Project Budget $233,640 Total Budget $4,300,741 Billed Through Previous Invoice $4,031,287 Billed This Period $ 21,384 Remaining Project Budget $ 248,070 While the budget summary above accurately represents the invoiced amounts from EPG and current charges from PEI, it does not represent all of the work in process but not invoiced. My letter to you of May 16, 2000 provides a summary of the work invoiced and in process through April 28, 2000. Referencing my letter of May 16, 2000, a summary for Task 10 is as follows: Task 10 — Budget $389,547 Task 10 - Work Invoiced and Work $258,824 Completed but not yet Invoiced, through April 28, 2000 Task 10 — Remaining Budget $130,723 Dora, should you have any questions about this report or any of the backup, please do not hesitate to contact Mike Walbert or me. Sincerely, POWER Engineers, Inc. Randy Pollock, P.E. Project Manager RP/Ik Enclosures cc: PROJECT TEAM HLY 23-235 HY (ENGINEERS SOUTHERN INTERTIE ROUTE SELECTION STUDY - PHASE 1 - 120376 PROJECT FINANCIAL SUMMARY ~ JUNE, 2000 INVOICE Task 1 Task 4 Task 5 Task 6 Task 7 Task 8 Task 9 Base Not to Exceed $351,050 $303,475 $402,570 $247,616 $101,480 $202,655 $189,861 $3,043,423 Budget CWG Contract $23,789 $32,866 $4,904 N/A N/A N/A N/A $103,046 Amendment No. 4 DF! Contract N/A N/A $45,000 N/A N/A N/A $45,000 Amendment No. 5 DFI Contract N/A $11,400 N/A $11,400 Amendment No. 6 DFI Contract N/A $3,502 N/A N/A $3,502 Amendment No. 7 DFI Contract N/A $89,487 N/A N/A N/A $89,487 Amendment No. 8 | Task 5&6 N/A $194,150 ($194,150) N/A N/A $0 Reallocation * Contract | Amendment N/A $31,926 N/A N/A N/A N/A N/A $31,926 No.9 Contract | Amendment N/A N/A $118,193 N/A N/A N/A N/A N/A $118,193 No. 11 Contract 820, N/A N/A $465,215 N/A N/A N/A NA N/A $465,215 Amendment No. 1 Contract 820 N/A N/A N/A N/A N/A N/A N/A N/A $389,547 $389,547 Amendment No. 2 Total Not to Exceed $374,839 $679,591 $336,341 $1,366,349 $53,466 $101,480 $202,655 $189,861 $389,547 $4,300,741 Budget Actual Budget Expended $374,839 $679,583 $336,315 $1,353,299 $52,250 $101,476 $202,610 $189,852 $134,523 $4,031,287 Through Previous Invoice Current Invoice Amount $0 $0 $0 $0 $0 $0 $0 $0 $21,384 $21,384 Actual Budget Expended $374,839 $336,315 $1,353,299 $101,476 $202,610 $189,852 $155,907 $4,052,671 Through Current Invoice Remaining $0 $8 $26 $13,050 $4 $45 $9 $233,640 $248,070 Budget e Task 5 budget amount reflects the addition of Contract No. 820, Amendment No. 1 funds. « Task 10 budget amount reflects the addition of Contract No. 820, Amendment No. 2 funds. HLY 23-235 6/16/00 Page 1 of 3 SOUTHERN INTERTIE PROJECT PROJECT SUMMARY REPORT THROUGH PERIOD ENDING: 06-10-00 4TH QUARTER 1999 —y 1ST QUARTER 2000 2ND QUARTER 2000 DEC APR Tech/Environmental Support | ~ Actual % Work Completed* 0% 2%| «11% | ss 14% 29%| 38%} = 67%, = 79% Planned 9 % Complete $ (to date) 7 _ — oe | | i Actual % Expended $ (to date) 0% | 2% 11% 14% 29% 38% 67% 79% Planned $ (this period) __| fo ere! Actual $ Expended (this period) $366 $3,903 | $15,627 $3,982 | $27,330] $14,804| $52, 203 | $19,732 Planned $(todate) = | _ | | | | | Actual $ Expended (to date) _ $366 $4,269 | $19,896 $23,878 $51,209| $66,013] $118,216 | $137,948 Contract No. 820, Amend. No. 2 | $175,265 | $175,265 | $175,265 | $175,265 | $175,265 | $175,265 | $175,265 | $175,265 | Actual Remaining Task Budget | $174,899 | $170,996 | $155,369 | $151,387 | $124,056 | $109,252 $57,049 | $37,317 10-2 |Public Involvement | Actual % Work Completed | 0%) = =O%} ——dO%| 0%| : 0% _ 0%) Planned % Complete $(todate) | _ ft - _| = 4 _ —t - Actual % Expended $ (to date) 0% 0% 0% 0% 0% 0% 0% 0% ____ Planned $ (this period) | | | - { tf Actual $ Expended (this period) $0 | $0 $0 $0 $0 $0 $0 | $0 ___ Planned $(todate) __ _ _ ee | | 2 | Actual $ Expended (to date) $0 $0 $0 $0 $0 $0 $0 [ $0 Contract No. 820, Amend. No.2 | $88,603 | _ $88,603 | $88,603 | $88,603] $88,603 | $88,603 | $88,603 Actual Remaining Task Budget $88,603 | $88,603 | $88,603 | $88,603 | $88,603 $88,603 10-3 |Mailing List $88,603 0% 11/08/99 Contract 820 Amendment No. 2 HLY 23-235a Actual % Work Completed | 0% 0% 0% 0% 0%| — -O%| 0%| Planned % Complete $ (to date) | - _ - fo - a Actual % Expended $ (to date) 0% 0% 0% 0% 0% 0% 0% 0% Planned $ (this period) 7 | - _ 7 | | {oo Actual $ Expended (this period) $0 $0 $0 | $0 $0 $0 $0 $0 ___ Planned $(todate) ee [fo 7 ; | Lo | Actual $ Expended (to date) $0 $0 $0 $0 | $0 $0 $0 $0 Contract No. 820, Amend. No.2 | $19,040 | $19,040] $19,040 $19,040 $19,040] $19,040| $19,040 | $19,040 Actual Remaining Task Budget $19,040 $19,040 $19,040 $19,040 $19,040 $19,040 $19,040 | $19,040 6/16/00 Page 2 of 3 SOUTHERN INTERTIE PROJECT PROJECT SUMMARY REPORT THROUGH PERIOD ENDING: 06-10-00 Print & Distribute DEIS/EIS 4TH QUARTER 1999 1ST QUARTER 2000 2ND QUARTER 2000 NOT APPLICABLE AT THIS TIME JAN Actual % Work Completed _ Planned % Complete $ (to date) Actual % Expended $ (to date) Planned $ (this period) Actual $ Expended (this period) | a Planned $ (to date) Actual $ Expended (to date) Contract No. 820, Amend. No. 2 Actual Remaining Task Budget PM & Schedule Admin. Actual % Work Completed _ 3% 5% 6%! = 9% 11% 13% 16%) == 18%| Planned 1 % Complete $ (to date) | Mw hw it | eo tel | ae MI Ik Actual % Expended $ (to date) 3%| 5% 6% 9%! 11% 13% 16% 18% __ Planned $ (this period) ll : | i; I] J Actual $ Expended (this period) $2,260 $1,686 $1,010 $2,228 | $1,551 $1,167 $2,486 $1, 652 _ Planned $(todate) __ / al J dL a | ; | MA Hil all Actual $ Expended (to date) $2,260 $3,946 $4,956 $7,184 | $8,735 $9,902 $12,388 $14,( 040 Contract No. 820, Amend. No.2 | $76,935 | $76,935 | $76,935 $76,935 $76,935| $76,935| $76,935| $76,935. Actual Remaining Task Budget $74,675 | $72,989 : $69,751 $68,200 | $67,033 |Update MOU "Actual % Work Completed | 0%! 0%] 50% 50%| — 50%| 50%] ~~: 100%| 100% Planned % Complete $ (to date) | ; A ee AL : Actual % Expended $ (to date) 0% 0% 0% 0% | 31% 31% 31% 31% _ Planned $ (this period) _ i al ; = i 7 MM il | Actual $ Expended (this period) | = $0, = $0] Ss $0, ~—s«a$.-—s«$,9117 | _ $0 | $0; «$0 Planned $ (to date) _| MIL ML I | | Actual $ Expended (to date) $0 $0 $0 $0 $3,917 $3,917 $3,917 | $3,917 Contract No. 820, Amend. No.2 | $12,501 | $12,601| $12,501 / $12,501 | $12,501| $12,501[ $12,501 | $12,501 | Actual Remaining Project Budget] $12,501 | $12,501} $12,501, $12,501 $8,584 $8,584 $8,584 [ $8,584 11/08/99 Contract 820 Amendment No. 2 HLY 23-235a 6/16/00 SOUTHERN INTERTIE PROJECT THROUGH PERIOD ENDING: Page 3 of 3 PROJECT SUMMARY REPORT 06-10-00 4TH QUARTER 1999 _DEC 1ST QUARTER 2000 2ND QUARTER 2000 Brief Corps Engineers _ Actual % Work Completed 0%| mak 50% 50%| 50%] 100%, 100% Planned % Complete $ (to date) | __ _ | ; _ | 1 a Actual % Expended $ (to date) 0% | 0% 0% | 0% 0% 0% 0% 0% __ Planned $ (this period) - =e _ | _ _| | — ; Actual $ Expended (this period) $0 $0 $0 $0 $0 $0 | $0 $0 Planned $ (to date) | | _ : Tt |e _ oe Actual $ Expended (to date) $0 $0 $0 | $0 $0 $0 $0 | $0 Contract No. 820, Amend. No. 2 Actual Remaining Task Budget PHASE 10 TOTAL ___ Actual % Work Completed Planned % Complete $ (to date) Actual % Expended $ (to date) _ Planned $ (this period) Actual $ Expended (this period) Planned § (to date) Actual $ Expended (to date) Contract No. 820, Amend. No. 2 Remaining Phase 10 Budget $17,203 $17,203 $17,203 | $17,203 | $17,203 $17,203 | $17,203 $17,203 | $17,203 $17,203 | $17,203 $17,203 | $17,203 $17,203 | 6% 20% 1%, 6% 20%| 35% 40% | | | | | | $2,626 | $5,589| $16,637, $6,210 $32,798] $15,971] $54,689 $21,384 $2,626| $8,215| $24,852 $31,062 $63,861] $79,832] $134,521 $155,905 $389,547 | $389,547 | $389,547 | $389,547 | $389,547 | $389,547 | $389,547 | $389,547 $386,921 | $381,332 | $364,695 $358,485 $325,686 | $309,715 | $255,026 | $233,642 _|Notes: * The Actual Percent complete is the same as the Actual Percent Expended because the work scope is reactive to requests from RUS for support to the preparation of the DEIS, rather than for a specifically defined scope of work. 11/08/99 Contract 820 Amendment No. 2 HLY 23-235a DAILY ACTIVITY LOG Project Name: Southern Intertie DEIS Support Project No: 120376-10 Project Staff Asst.: Tammy Nettinga Period Ending: 06/10/00 Your Name: Claire L. Liman Company: PEl Date Description of Work Performed 05/20/00 55-05-02 Project Scheduling/Reporting Note: Completed form to be turned in with your time sheet on Mondays. Staff Assistant will forward to the designated Project Staff Assistant for distribution/filing. HLY 23-435b(120376-05)Ak DAILY ACTIVITY LOG Project Name: Southern Intertie DEIS Support Project No: 120376-10 Project Staff Asst.: Tammy Nettinga Period Ending: 06/10/00 Your Name: Randy Pollock Company: PEl Date Description of Work Performed 05/20/00 55-01-01 Project Management 06/03/00 55-01-01 Project Management 06/10/00 55-01-01 Project Management Note: Completed form to be turned in with your time sheet on Mondays. Staff Assistant will forward to the designated Project Staff Assistant for distribution/filing. HLY 23-435b(120376-05)Ak DAILY ACTIVITY LOG Project Name:Southern Intertie Project - Chugach Project No: 120376-10 Project Staff Asst.: Tammy Nettinga Period Ending:June 10, 2000 Your Name: Mike Walbert Company:POWER Engineers Date Task Description of Work Performed 05/15/00 120376-10-55-05-02 Project Reporting 05/16/00 120376-10-55-05-02 Project Reporting 05/18/00 120376-10-55-05-02 Project Reporting Note: Completed form to be turned in with your time sheet on Mondays. Staff Assistant will forward to the designated Project Staff Assistant for distribution/filing. HLY 23-208c(120376-10)Ak CHUGACH ELECTRIC ASSOCIATION, INC. Financial Statements December 31, 1999 and 1998 Rana 601 West Fifth Avenue Suite 700 Anchorage, AK 99501-2258 Independent Auditors’ Report The Board of Directors Chugach Electric Association, Inc.: We have audited the accompanying balance sheets of Chugach Electric Association, Inc. as of December 31, 1999 and 1998, and the related statements of revenues, expenses and patronage capital and cash flows for each of the years in the three-year period ended December 31, 1999. These financial statements are the responsibility of the Association's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Chugach Electric Association, Inc. as of December 31, 1999 and 1998, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 1999, in conformity with generally accepted accounting principles. KPI LEP Anchorage, Alaska February 25, 2000 aaa a member CHUGACH ELECTRIC ASSOCIATION, INC. Balance Sheets December 31, 1999 and 1998 Assets Utility plant (notes 2, 6, 13 and 14): Electric plant in service Construction work in progress Less accumulated depreciation Net utility plant Other property and investments, at cost: Nonutility property Investments in associated organizations (note 3) Current assets: Cash and cash equivalents, including Repurchase agreements of $6,574,457 in 1999 and $4,153,475 in 1998 Cash-restricted construction funds Special deposits Accounts receivable, less provision for doubtful accounts of $389,223 in 1999 and $447,908 in 1998 Materials and supplies Prepayments Other current assets Total current assets Deferred charges (notes 9 and 15) See accompanying notes to financial statements. 1999 $ 641,627,328 47,257,296 688,884,624 243,082,832 445,801,792 413,515 8.946.861 9,360,376 4,110,030 538,404 182,164 17,911,749 17,180,136 861,947 341,702 41,126,132 22,067.237 $518,355,537 1998 $ 620,216,818 30,405,736 650,622,554 233,981,397 416,641,157 3,550 8.356.364 8,359,914 2,312,574 177,366 121,164 17,243,266 15,963,434 917,381 349,030 37,084,215 19,006,164 $481,091,450 CHUGACH ELECTRIC ASSOCIATION, INC. Balance Sheets, Continued December 31, 1999 and 1998 Liabilities Equities and margins (note 11): Memberships Patronage capital (note 4) Other (note 5) Long-term obligations, excluding current installments (notes 6, 7 and 11): First mortgage bonds payable National Bank for Cooperatives bonds Payable Current liabilities: Current installments of long-term debt and capital leases (notes 6, 7 and 11) Accounts payable Consumer deposits Accrued interest Salaries, wages and benefits Fuel Other Total current liabilities Deferred credits (note 12) See accompanying notes to financial statements. 1999 $ 960,808 117,335,481 4.228.356 122,524,645 194,139,000 143,011,295 337,150,295 6,372,405 9,508,851 1,059,677 6,066,114 4,053,228 4,381,304 2,527,798 33,969,377 24.711.220 $18,355,537 1998 $ 911,253 109,622,996 3.489.047 114,023,296 235,101,000 70,816,699 305,917,699 6,088,802 8,838,757 993,616 6,722,325 3,755,837 5,362,713 1,318,947 33,080,997 28,069.458 $.481,091,450 CHUGACH ELECTRIC ASSOCIATION, INC. Statements of Revenues, Expenses and Patronage Capital Years ended December 31, 1999, 1998 and 1997 Operating revenues Operating expenses: Production Purchased power Transmission Distribution Consumer accounts Sales expense Administrative, general and other Depreciation Total operating expenses Interest: On long-term debt Charged to construction — credit On short-term debt Net interest Net operating margins Nonoperating margins: Interest income Other Property gain (loss) Assignable margins Patronage capital at beginning of year Retirement of capital credits and estate payments (note 4) Patronage capital at end of year See accompanying notes to financial statements. 1999 $_142.644.327 40,301,607 8,581,979 3,813,438 9,400,618 4,387,421 1,227,908 22,892,479 19,851,436 110.456.886 24,137,593 (1,000,246) 998.034 ~24,135,381 8,052,060 592,208 1,003,029 20.137 9,667,434 109,622,996 (1,954,949) $117,335.48] 1998 $141,825.373 45,261,450 8,462,835 2,771,652 8,876,890 4,177,980 1,125,410 17,592,829 22.468.395 110.737.441 25,159,660 (821,137) 130.146 24.468.669 6,619,263 711,155 1,050,899 349,087 8,730,404 104,800,092 (3.907.500) $109,622,996 1997 $ 143,947,730 45,879,337 14,033,282 3,378,540 8,640,443 4,955,838 15,071,966 21,111,584 113,070,990 24,942,281 (629,764) 771,844 25,084,361 5,792,379 632,191 520,414 609,413 7,554,397 100,685,517 (3.439.822) $104,800,092 CHUGACH ELECTRIC ASSOCIATION, INC. Statements of Cash Flows Years ended December 31, 1999, 1998 and 1997 1999 1998 Assignable margins $9,667,434 $8,730,404 Adjustments to reconcile assignable margins to net cash provided by operating activities: Depreciation and amortization 23,563,805 24,605,760 Capitalized interest (1,151,720) (1,081,394) Property (gains) losses and obsolete inventory write-off 242 (349,087) Other (221) 60,734 Changes in assets and liabilities: (Increase) decrease in assets: Special deposits (61,000) 30,540 Accounts receivable (668,483) 6,755,872 Prepayments 55,434 (359,010) Materials and supplies, net (1,216,702) (344,349) Deferred charges (14,179,418) (7,898,240) Other assets 7,328 (43,615) Increase (decrease) in liabilities: Accounts payable 670,093 1,800,524 Accrued interest (656,211) (182,010) Deferred credits (2,973,944) (1,829,112) Consumer deposits, net 66,061 (44,625) Other liabilities 524,833 (3,129,329) Total adjustments 3,980,097 17,992,659 Net cash provided by operating activities 13,647,531 26,723,063 Extension and replacement of plant (40,864,582) (19,447,902) (Increase) decrease in investments in associated (590,276) (552,827) organizations Net cash (used) in investing activities (41,454,858) (20,000.729) Transfer of restricted construction funds (361,038) 187,412 Net decrease in notes payable 0 0 Proceeds from long-term debt 72,500,000 0 Repayments of long-term debt (40,983,801) (5,913,512) Memberships and donations received 788,865 80,695 Retirement of patronage capital (1,954,949) (3,907,500) Net refunds of consumer advances for construction (384,294) (81,384) Net cash used by financing activities 29.604.783 (9.634.289) Net increase in cash and cash equivalents 1,797,456 (2,911,955) Cash and cash equivalents at beginning of year $2,312,574 $5,224,529 Cash and cash equivalents at end of year $4,110,030 $2,312,574 Supplemental disclosure of cash flow information — interest expense paid, net of amounts capitalized 24,791,592 24,650,680 See accompanying notes to financial statements. 1997 $7,554,397 23,532,263 (799,999) * (609,413) (241,317) (62,471) (8,629,254) 135,886 568,507 (2,299,547) (11,035) 1,860,074 (172,052) (755,366) (28,665) (1,076,365) 11,411,246 18,965,643 (17,487,859) 24,235 (17,463,624) 1,006,608 (2,750,000) 15,000,000 (10,957,586) 527,179 (3,439,822) (1,083,688) (1,697,309) (195,290) $5,419,819 $5,224,529 25,256,413 (1) CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements December 31, 1999 and 1998 Description of Business and Summary of Significant Accounting Policies Description of Business Chugach Electric Association, Inc. (Association or Chugach) is the largest electric utility in Alaska. The Association is engaged in the generation, transmission and distribution of electricity to directly served retail customers in the Anchorage and upper Kenai Peninsula areas. Through an interconnected regional electrical system, Chugach's power flows throughout Alaska's Railbelt, a 400-mile-long area stretching from the coastline of the southern Kenai Peninsula to the interior of the state, including Alaska's largest cities, Anchorage and Fairbanks. Chugach also supplies much of the power requirements of three wholesale customers, Matanuska Electric Association (MEA), Homer Electric Association (Homer) and the City of Seward (Seward). The Association operates on a not-for-profit basis and, accordingly, seeks only to generate revenues sufficient to pay operating and maintenance costs, the cost of purchased power, capital expenditures, depreciation, and principal and interest on all indebtedness and to provide for reasonable margins and reserves. The Association is subject to the regulatory authority of the Regulatory Commission of Alaska (RCA), (formerly the Alaska Public Utilities Commission (APUC)). Management Estimates In preparing the financial statements, management of the Association is required to make estimates and assumptions relating to the reporting of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the balance sheet and revenues and expenses for the reporting period. Actual results could differ from those estimates. Regulation The accounting records of the Association conform to the Uniform System of Accounts as prescribed by the Federal Energy Regulatory Commission. The Association meets the criteria, and accordingly, follows the accounting and reporting requirements of Statement of Financial Accounting Standards No. 71, Accounting for the Effects of Certain Types of Regulation (SFAS 71). Revenues in excess of current period costs (net operating margins and nonoperating margins) in any year are designated on the Association's statement of revenues and expenses as assignable margins. Retained assignable margins are designated on the Association's balance sheet as patronage capital, which is assigned to each member on the basis of patronage. This patronage capital constitutes the principal equity of the Association. CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements In July 1997, the Financial Accounting Standards Board (FASB) Emerging Issues Task Force (EITF) reached a consensus on EITF 97-4 "Deregulation of the Pricing of Electricity - Issues Related to the Application of FASB Statements No. 71 and No. 101." This issue discusses when an enterprise should stop applying SFAS 71 to the separable portion of its business whose product or service pricing is being deregulated and how a company should account for its stranded costs after it has discontinued the application of SFAS 71. It also provides guidance with respect to the evaluation of regulatory assets and liabilities and concluded that these items should be determined on the basis of where in the business the regulated cash flows to realize and settle them will be derived. The Association's current method of accounting is consistent with the EITF. The Association performs an annual evaluation of the requirements of SFAS 71 and related exposures. Reclassifications Certain reclassifications have been made to the 1997 and 1998 financial statements to conform to the 1999 presentation. Plant Additions and Retirements Additions to electric plant in service are recorded at original cost of contracted services, direct labor and materials, and indirect overhead charges. For property replaced or retired, the average unit cost of the property unit, plus removal cost, less salvage, is charged to accumulated provision for depreciation. The cost of replacement is added to electric plant. Operating Revenues Operating revenues are based on billing rates authorized by the RCA which are applied to customers' usage of electricity. Included in operating revenue are billings rendered to customers adjusted for differences in meter read dates from year to year. The Association's tariffs include provisions for the flow through of gas cost increases pursuant to existing gas supply contracts. CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements In August 1996, the Board of Directors approved a petition to the APUC to withdraw from the Simplified Rate Filing (SRF) process. This petition was submitted to the APUC as part of Docket U-96-37, which was opened to resolve rate disputes with two of Chugach's wholesale customers (AEG&T/MEA/Homer). Interim-refundable rates for AEG&T/MEA/Homer were ordered pending resolution of the docket. In February 1997, the APUC approved a Settlement Agreement between Chugach and AEG&T/MEA/Homer resolving issues in the docket and establishing permanent rates. As part of the APUC order, the Association was required to file Cost of Service and Revenue Requirement Studies. These studies were filed in March 1997. The APUC approved Chugach's withdrawal from SRF in July 1998. Rate changes will be applied for through general rate case and other normal APUC procedures. At December 31, 1999, Docket U-96-37 had not been closed. A provision for a wholesale rate refund of $2,553,047 to AEG&T/MEA/Homer was recorded at December 31, 1999 to accommodate certain rate adjustment clauses contained in the Settlement Agreement. In 1998 a new power sales agreement was negotiated between Chugach and Seward. The new contract was filed with the APUC and approved on an interim-refundable basis effective September 11, 1998 by an order dated October 12, 1998. The APUC specifically postponed a decision on whether to allow the reduced rates under the contract to be effective as of March 1, 1998 as the parties had agreed in the contract. In a subsequent order issued June 14, 1999 the RCA made the interim refundable rates permanent effective September 11, 1998 and did not allow the request to make the rates effective March 1, 1998. In October 1998 Marathon Oil Company, one of Chugach's natural gas suppliers, notified Chugach that it had reached a settlement with the State of Alaska regarding additional excise and royalty taxes for the period 1989 through 1998. In accordance with the purchase contract, Chugach would be responsible for these additional taxes. The RCA approved Chugach’s plan to recover this over 12 months through the Fuel Surcharge mechanism except for the retail portion in the amount of $436,778 that was written-off at December 31, 1998. Recovery of this expense began in rates on April 1, 1999. Despite RCA approval and subsequent re-confirmation by the RCA, MEA has refused to pay the portion of its monthly bill it considers to be recovery of the Marathon tax. Investments in Associated Organizations Investments in associated organizations represent capital requirements as part of financing arrangements. CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements The Association has the intent and ability to hold these investments to maturity, and accordingly has elected to account for them at cost under SFAS 115. Deferred Charges and Credits Deferred charges, representing regulatory assets, are amortized to operating expense over the period allowed for rate-making purposes, generally five years. Nonrefundable contributions in aid of construction are credited to the associated cost of construction of property units. Refundable contributions in aid of construction are held in deferred credits pending their return or other disposition. Depreciation and Amortization Depreciation and amortization rates have been applied on a straight-line basis and at December 31, 1999 are as follows: Rate (%) Steam production plant 2.70 - 2.96 Hydraulic production plant 1.33 - 2.88 Other production plant 3.34 - 6.50 Transmission plant 1.85 - 5.37 Distribution plant 2.10 - 4.55 General plant 2.22 - 20.00 Other 1.88 - 2.75 In 1997 an update of the Depreciation Study was completed utilizing Electric Plant in Service balances as of December 31, 1995. Depreciation rates developed in that Study were implemented in January, 1998. CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements Capitalized Interest Allowance for funds used during construction and interest charged to construction - credit are the estimated costs during the period of construction of equity and borrowed funds used for construction purposes. The Association capitalized such funds at the average rate (adjusted monthly) of 7.4% during 1999 and 8.3% during 1998 and 1997. : Cash and Cash Equivalents For purposes of the statement of cash flows, the Association considers all highly liquid debt instruments with a maturity of three months or less upon acquisition by the Association (excluding restricted cash and investments) to be cash equivalents. Materials and Supplies Materials and supplies are stated at the lower of cost or market and valued at average cost. Fair Value of Financial Instruments Statement of Financial Accounting Standards 107, Disclosures About the Fair Value of Financial Instruments, requires disclosure of the fair value of certain on and off balance sheet financial instruments for which it is practicable to estimate that value. The following methods are used to estimate the fair value of financial instruments: Cash and cash equivalents and restricted cash - the carrying amount approximates fair value because of the short maturity of those instruments. Investments in associated organizations - the carrying amount approximates fair value because of limited marketability and current market interest rates which approximate interest rates on the investments. Consumer deposits - the carrying amount approximates fair value because of the short refunding term. Long-term obligations - the fair value is estimated based on the quoted market price for same or similar issues (note 7). Financial Instruments and Hedging The Association uses interest rate swap and forward rate lock agreements to manage interest costs and the risk associated with changing interest rates. As interest rates change, the differential paid or received is recognized in interest expense of the period. CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements Environmental Remediation Costs The Association accrues for losses associated with environmental remediation obligations when such losses are probable and can be reasonably estimated. Such accruals are adjusted as further information develops or circumstances change. Estimates of future costs for environmental remediation obligations are not discounted to their present value. . 2) Utility Plant Summary Major classes of electric plant as of December 31 are as follows: 1999 1998 Electric plant in service: Steam production plant $60,392,869 $60,392,869 Hydraulic production plant 8,798,695 8,798,695 Other production plant 104,925,446 109,153,064 Transmission plant 211,881,174 191,960,788 Distribution plant 162,365,836 156,976,983 General plant 47,704,821 44,782,572 Unclassified electric plant in service 38,834,298 41,598,712 Equipment under capital lease 56,323 56,323 Other 6,667,866 6,496,812 Total electric plant in service 641,627,328 620,216,818 Construction work in progress 47.257.296 30.405.736 Total electric plant in service and construction work in progress $688,884.624 $650,622,554 Depreciation of unclassified electric plant in service has been included in functional plant depreciation accounts in accordance with the anticipated eventual classification of the plant investment. (3) (4) CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements Investments in Associated Organizations Investments in associated organizations include the following at December 31: 1999 1998 National Rural Utilities Cooperative Finance Corporation (NRUCFC) $ 6,095,980 $ 6,095,980 National Bank for Cooperatives (CoBank) 2,708,200 2,117,924 NRUCFC capital term certificates 32,300 32,300 Other 110,381 110,160 $8,946,861 $8,356,364 The Farm Credit Administration, CoBank's federal regulators, requires minimum capital adequacy standards for all Farm Credit System institutions. CoBank's loan agreements require, as a condition of the extension of credit, that an equity ownership position be established by all borrowers. The Association's investment in NRUCFC similarly was required by its financing arrangements with NRUCFC. The investments in NRUCFC and CoBank mature at various dates through 2020 and bear interest at rates ranging from 3% to 5%. Patronage Capital The Association has approved an Equity Management Plan which established in general, a ten-year (for wholesale customers) and twenty-year (for retail customers) capital credit retirement of patronage capital, based on the members’ proportionate contribution to Association assignable margins. At December 31, 1999, out of the total of $117,335,481 patronage capital, the Association had assigned $108,605,077 of such patronage capital (net of capital credit retirements). Approval of actual capital credit retirements is at the discretion of the Association's Board of Directors. In December 1997, the Board of Directors authorized the retirement of $1,859,730 of retail capital credits representing the remaining 1983 patronage capital. The Board of Directors also authorized the retirement of 1987 wholesale capital credits in the amount of $1,205,510 in December 1997. A special wholesale capital credit retirement of $88,818, representing wholesale margins from 1985, was authorized in December 1997. In December 1998 the Board of Directors authorized the retirement of $2,208,997 of retail capital credits representing the balance of 1984 retail distribution patronage. The Board also authorized the retirement of $1,533,287 of wholesale patronage for 1988. CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements In November 1999 the Board of Directors authorized the retirement of $1,766,000 of retail patronage for 1984. Following is a five-year summary of anticipated capital credit retirements: Year ending Wholesale Retail Total 2000 - 3,750,000 3,750,000 2001 - 4,004,000 4,004,000 2002 - 9,499,000 9,449,000 2003 - 5,399,000 5,399,000 2004 1,359,000 5,383,000 6,742,000 (5) Other Equities A summary of other equities at December 31 follows: 1999 1998 Nonoperating margins, prior to 1967 $ 23,625 $) | 23,625 Donated capital 183,907 184,581 Unredeemed capital credit retirement 4.020.824 3.280.841 $4.228.356 = = $3,489,047 (6) CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements Long-term Obligations Long-term obligations at December 31 are as follows: First mortgage bonds of 8.08% maturing in 2002 and 9.14% maturing in 2022 with interest payable semiannually March 15 and September 15: 8.08% 9.14% CoBank 8.95% bond maturing in 2002, with interest payable monthly and principal due semi-annually CoBank 7.76% bond maturing in 2005, with interest payable monthly CoBank 5.60% bonds maturing 2022, with interest payable monthly CoBank 5.60% bonds maturing in 2002, 2007 and 2012 with interest payable monthly CoBank 6.88% bonds maturing in 2002, with interest payable monthly CoBank 6.85% bonds maturing in 2002, with interest payable monthly Total long-term obligations Less current installments Long-term obligations, excluding Current installments 1999 $ 17,396,000 182,810,000 816,700 10,000,000 45,000,000 15,000,000 42,500,000 30,000,000 343,522,700 6,372,405 $.337,150,295 $ 23,205,000 217,705,000 1,096,501 10,000,000 45,000,000 15,000,000 312,006,501 6,088,802 $.305.917,699 Substantially all assets are pledged as collateral for the long-term obligations. CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements Maturities of Long-term Obligations Long-term obligations at December 31, 1999 mature as follows: Year ending Sinking Fund Requirements _ Principal maturities Total December 31 First mortgage CoBank _bonds mortgage bonds 2000 6,067,000 305,405 6,372,405 2001 6,097,000 333/350 6,430,350 2002 5,232,000 77,677,944 82,909,944 2003 5,041,000 865,821 5,906,821 2004 5,502,000 945,000 6,447,000 Thereafter 172,267,000 63.189.180 235,456,180 $200,206.000 $143,316.700 — $343,522.700 Lines of Credit The Association had an annual line of credit of $35,000,000 in 1999 and 1998 available with CoBank. The CoBank line of credit expires August 1, 2000 but carries an annual automatic renewal clause. At December 31, 1999 and 1998, there was no outstanding balance on this line of credit. In addition, the Association had an annual line of credit of $50,000,000 available at December 31, 1999 and 1998 with NRUCFC. At December 31, 1999 and 1998 there was no outstanding balance on this line of credit. The NRUCFC line of credit expires October 14, 2002. Refinancing On September 19, 1991, Chugach issued $314,000,000 of First Mortgage Bonds, 1991 Series A (Bonds), for purposes of repaying existing debt to the Federal Financing Bank and the Rural Electrification Administration (now Rural Utilities Services). Pursuant to Section 311 of the Rural Electrification Act, Chugach was permitted to prepay the REA debt at a discounted rate of approximately 9%, resulting in a discount of approximately $45,000,000 (note 12). CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements The bonds maturing in 2002 (Series A 2002 Bonds) are subject to annual sinking fund redemption at 100% of the principal amount thereof which commenced March 15, 1993. The bonds maturing in 2022 (Series A 2022 Bonds) are subject to annual sinking fund redemption at 100% of the principal amount thereof commencing March 15, 2003. The Series A 2002 Bonds are not subject to optional redemption. The Series A 2022 Bonds are redeemable at the option of Chugach on any interest payment date at an initial redemption price commencing in 2002 of 109.140% of the principal amount thereof declining ratably to par on March 15, 2012. The Bonds are secured by a first lien on substantially all of Chugach's assets. The Indenture prohibits outstanding short-term indebtedness (other than trade payables) in excess of 15% of Chugach's net utility plant and limits certain cash investments to specific securities. In April 1997, Chugach reacquired $5,000,000 of the Series A 2022 Bonds at a premium of 109.7500. Total transaction cost, including accrued interest and premium, was $5,510,350. In February 1999, Chugach reacquired $11,000,000 of the Series A 2022 Bonds at a premium of 117.05. Total transaction cost, including accrued interest and premium, was $13,322,344. In February 1999, Chugach reacquired $14,000,000 of the Series A 2022 Bonds at a premium of 116.25. Total transaction cost, including accrued interest and premium, was $16,868,592. In February 1999, Chugach reaquired $9,895,000 of the Series A 2022 Bonds at a premium of 116.75. Total transaction cost, including accrued interest and premium, was $11,974,467. In March 2000, Chugach reaquired $8,500,000 of the Series A 2022 Bonds at a premium of 104.00. Total transaction cost, including accrued interest and premium, was $9,215,502. On March 17, 1999, Chugach entered into a Treasury rate-lock transaction with Lehman Brothers Financial Products Inc. (Lehman Brothers) for the purpose of taking advantage of favorable market interest rates in anticipation of refinancing Chugach’s Series A Bonds due 2022 on their call date (March 15, 2002). As of December 31, 1999, the aggregate principal amount of Series A Bonds due 2022 was $182,810,000. Under the treasury rate- lock contract, Chugach will receive a lump-sum payment from Lehman Brothers on March 15, 2002, if the yield on 10- or 30-year Treasury bonds as of mid-February 2002, exceeds a specified target level (5.653% and 5.838%, respectively). Conversely, Chugach will on the same date be required to make a payment to Lehman Brothers if the yield on the 10- or 30-year Treasury bonds falls below its stated target yield. The fair value of the treasury rate lock agreement at December 31, 1999 approximated $13,000,000. CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements (7) Fair Value of Financial Instruments (8) The estimated fair values (in thousands) of the long-term obligations included in the financial statements at December 31 are as follows: 1999 1998 Carrying Fair Carrying Fair Value Value Value Value Long-term obligations (including current installments) $343,523 $354,534 $312,007 $349,353 Fair value estimates are dependent upon subjective assumptions and involve significant uncertainties resulting in variability in estimates with changes in assumptions. Employee Benefits Pension benefits for substantially all employees are provided through the Alaska Electrical Trust and Alaska Hotel, Restaurant and Camp Employees Health and Welfare Trust Funds (union employees) and the National Rural Electric Cooperative Association (NRECA) Retirement and Security Program (nonunion employees). The Association makes annual contributions to the plans equal to the amounts accrued for pension expense. For the union plans, the Association pays a contractual hourly amount per union employee which is based on total plan costs for all employees of all employers participating in the plan. In these master, multiple-employer plans, the accumulated benefits and plan assets are not determined or allocated separately to the individual employer. Pension costs for union plans were approximately $1,832,000 in 1999, $1,805,000 in 1998 and $1,810,000 in 1997. For several years, NRECA did not require contributions to the plan; consequently, no pension cost was incurred. In 1996 a moratorium was in effect from January through September. In 1997 approximately $601,000 was contributed to the NRECA plan. In 1998 approximately $813,000 was contributed to the NRECA plan for the full year. In 1999 approximately $868,000 was contributed to the NRECA plan for the full year. (9) (10) (11) CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements Deferred Charges Deferred charges consisted of the following at December 31: 1999 1998 Debt issuance and reacquisition costs $ 6,196,555 $ 3,838,237 Refurbishment of transmission equipment 262,346 271,605 Computer software and conversion 12,186,272 11,104,406 Studies 1,880,734 2,253,165 Business venture studies 273,660 72,961 Fuel supply negotiations 369,609 392,325 Major overhaul of steam generating unit 427,305 632,411 Environmental matters and other (note 15) 470.756 441.054 $22,067,237 $19,006,164 Income Taxes The Association is exempt from federal income taxes under the provisions of Section 501(c)(12) of the Internal Revenue Code, except for unrelated business income. For the years ending December 31, 1999, 1998 and 1997 the Association received no unrelated business income. Return of Capital Under provisions of its long-term debt agreements, the Association is not directly or indirectly permitted to declare or pay any dividend or make any payments, distributions or retirements of patronage capital to members if an event of default exists with respect to its bonds (event of default), if payment of such distribution would result in an event of default, or if the aggregate amount expended for all distributions on and after September 26, 1991 exceeds the sum of $7,000,000 plus 35% of the aggregate assignable margins (whether or not such assignable margins have since been allocated to members) of the Association earned after December 31, 1990 (or, in the case such aggregate shall be a deficit, minus 100% of such deficit). The Association may declare and make distributions at any time if, after giving effect thereto, the Association's aggregate margins and equities as of the end of the most recent fiscal quarter would be not less than 45% of the Association's total liabilities and equities as of the date of the distribution. The Association does not anticipate that this provision will limit the anticipated capital credit retirements described in note 4. CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements (12) Deferred Credits Deferred credits at December 31 consisted of the following: 1999 1998 Regulatory liability — unamortized gain on reacquired debt $ 21,271,412 $ 25,796,171 Refundable consumer advances for Construction 2,123,913 1,739,618 Estimated initial installation costs for Transformers and meters 272,554 277,969 Post retirement benefit obligation 286,200 255,700 New business venture 46,185 0 Other 710,956 0 $24,711,220 = $28,069,458 In conjunction with the refinancing described in note 6, the Association recognized a gain of approximately $45,000,000. The APUC permitted the Association to flow through the gain to consumers in the form of reduced rates over a period equal to the life of the bonds using the effective interest method; consequently, the gain has been deferred for financial reporting purposes as required by SFAS 71. Approximately $1,215,000 of the deferred gain was amortized in 1999. Approximately $1,700,000 of the deferred gain was amortized annually in 1998 and 1997. (13) Bradley Lake Hydroelectric Project The Association is a participant in the Bradley Lake Hydroelectric Project (Bradley Lake). Bradley Lake was built and financed by the Alaska Energy Authority (AEA) through State of Alaska grants and $166,000,000 of revenue bonds. The Association and other participating utilities have entered into take-or-pay power sales agreements under which shares of the project capacity have been purchased and the participants have agreed to pay a like percentage of annual costs of the project (including ownership, operation and maintenance costs, debt service costs and amounts required to maintain established reserves). Under these take-or-pay power sales agreements, the participants have agreed to pay all project costs from the date of commercial operation even if no energy is produced. The Association has a 30.4% share of the project's capacity. The share of debt service exclusive of interest, for which the Association is responsible is approximately $46,000,000. Under a worst case scenario, the Association could be faced with annual CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements expenditures of approximately $4.1 million as a result of its Bradley Lake take-or-pay obligations. Management believes that such expenditures, if any, would be recoverable through the fuel surcharge ratemaking process. Upon the default of a Bradley Lake participant, and subject to certain other conditions, AEA, through Alaska Industrial Development and Export Authority, is entitled to increase each participant's share of costs pro rata, to the extent necessary to compensate for the failure of another participant to pay its share, provided that no participant's percentage share is increased by more than 25%. On April 6, 1999, AEA issued $59,485,000 of Power Revenue Refunding Bonds, Third Series, for the purpose of refunding $59,110,000 of the First Series Bonds. The refunded First Series Bonds were called on July 1, 1999. The refunding resulted in aggregate debt service payments over the next nineteen years in a total amount approximately $9,500,000 less than the debt service payments which would be due on the refunded bonds. There was an economic gain of approximately $5,900,000. Economic gain is calculated as the net difference between the present value of the old debt service requirements and the present value of the new debt service requirements, discounted at the effective interest rate and adjusted for additional cash paid. On April 13, 1999, AEA issued $30,640,000 of Power Revenue Refunding Bonds, Fifth Series, for the purpose of refunding $28,910,000 of the First Series Bonds. The refunded First Series Bonds were called on July 1, 1999. The refunding resulted in aggregate debt service payments over the next twenty-three years in a total amount approximately $4,400,000 less than the debt service payments which would be due on the refunded bonds. There was an economic gain of approximately $2,900,000. The Association’s share of these savings will be approximately $546,000. The following represents information with respect to Bradley Lake at June 30, 1999 (the most recent date for which information is available). The Association's share of expenses were $3,902,737 in 1999, $4,112,292 in 1998 and $3,981,624 in 1997 and are included in purchased power in the accompanying financial statements. Other electric plant in service of $6,667,866 represents the Association's share of a Bradley Lake transmission line financed internally and the Association's share of the Eklutna Hydroelectric Project, purchased in 1997. Total Proportionate Share Plant in service $ 306,872,387 $ 93,289,206 Accumulated depreciation (53,593,915) (16,292,550) Interest expense 10,538,354 3,203,660 (14) (15) CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements Eklutna Hydroelectric Project During October 1997, the ownership of the Eklutna Hydroelectric Project formally transferred from the Alaska Power Administration to the participating utilities. This group consists of the Association along with Matanuska Electric Association (MEA) and Municipal Light and Power (AML&P). Other electric plant in service includes $1,956,954 representing the Association's share of the Eklutna Hydroelectric Plant. This balance will be amortized over the estimated life of the facility. During the transition phase and after the transfer of ownership, Chugach, MEA and AML&P have jointly operated the facility. Each participant contributes their proportionate share for operations and maintenance costs. Under net billing arrangements, Chugach then reimburses MEA for their share of the costs. Prior to the transfer of ownership, these costs were recorded as purchased power expenses; after the transfer these costs were recorded as power production expenses. In 1999, the Association charged $246,080 to various expense categories representing Chugach's share of Eklutna operations. Commitments and Contingencies Construction The Association is engaged in a continuous construction program. Management estimates that approximately $32,000,000 will be spent on the construction program in 2000. Contingencies The Association is a participant in various legal actions, claims and unasserted claims, both for and against its interests. Management believes that the outcome of any such matters will not materially impact the Association's financial condition, results of operations or liquidity. Standard Steel Salvage Yard Site A cost recovery action was filed in Federal District Court on December 27, 1991 by the United States against the Association and six other Potentially Responsible Parties seeking reimbursement of removal and response action costs incurred by the United States Environmental Protection Agency (“EPA”) at the Standard Steel and Metals Salvage Yard Superfund Site in Anchorage, Alaska. The site work and reporting required to complete the remedial action have been done. Although the total oversight costs of EPA and other federal agencies is not yet known, Chugach has prefunded these costs and believes that sufficient funds remain in the account to pay these costs and the on-going future site CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements monitoring costs. Chugach’s total costs for the site not reimbursed by its insurers will not exceed $500,000. Management believes that this amount is fully recoverable in rates and therefore would have no impact on Chugach’s financial condition or results of operations. Unsolicited Acquisition Proposal by Matanuska Electric Association, Inc. In October 1998, Matanuska Electric Association (MEA), Chugach’s largest wholesale customer, presented to the Board of Directors of Chugach (the Board) an unsolicited proposal (the MEA Proposal) to acquire substantially all of Chugach’s assets in exchange for the assumption of Chugach’s liabilities. After evaluating information provided by MEA and analyses of the MEA Proposal presented by Chugach’s staff and independent financial advisors, on November 12, 1998 the Board rejected the MEA Proposal. Subsequently, MEA gathered a sufficient number of signatures from Chugach’s members to force a special meeting of Chugach’s members for the purpose of considering the MEA Proposal. Under the Alaska Electric & Telephone Cooperative Act (AETCA), a special meeting may be called by 10% of Chugach’s members. Chugach held the special meeting to consider the MEA Proposal on November 18, 1999. Of the 14,492 ballots received and validated, 13,156 were cast against the MEA proposal and 1,336 (9.2%) were cast in favor. The proposal therefore fell far short of the approximately 27,500 members (including at least 2/3 of the members actually voting) that would have had to vote in favor of the MEA Proposal in order for the members to register their approval under Chugach’s bylaws and the AETCA. Year 2000 Conversion Chugach has recognized the need to investigate, test and remediate if necessary the critical systems and equipment under its control which could cause power and business disruptions in conjunction with what are collectively called "Year 2000" dates. Chugach completed Year 2000 conversion and remediation efforts. No adverse impacts to service were experienced at year end. Regulatory Cost Charge In 1992 the State of Alaska Legislature passed legislation authorizing the Department of Revenue to collect a regulatory cost charge from utilities in order to fund the APUC. The tax is assessed on all retail consumers and is based on kilowatt hour (kWh) consumption. The Regulatory Cost Charge has decreased since its inception (November 1992) from an initial rate of $.000626 per kWh to the current rate of $.000309, effective October 1, 1999. CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Financial Statements (16) Segment Reporting During 1998, Chugach adopted the Financial Accounting Standards Board Statement No. 131, Disclosures About Segments of an Enterprise and Related Information, which establishes standards for reporting information about a company’s operating segments. The Association had divided its operations into two reportable segments: Energy and Internet service. The energy segment derives its revenues from sales of electricity to residential, commercial and wholesale customers, while the Internet segment derives its revenues from provision of residential and commercial internet services and products. The reporting segments follow the same accounting policies used for the Association’s financial statements and described in the summary of significant accounting policies. Management evaluates a segment’s performance based upon profit or loss from operations. Jointly used assets are allocated by percentage of reportable segment usage and centrally incurred costs are allocated using factors developed by the Association, which are patterned upon usage. The Internet segment began operations during 1998, the results of which are immaterial to the financial statements. The following is a tabulation of business segment information for the year ended December 31, 1999: Operating Revenues Internet 374,296 Energy 142,270,031 Total operating revenues 142,644,327 Assignable Margins Internet -1,293,388 Energy 10,960,822 Total assignable margins __9,667,434 Assets Internet 564,477 Energy 517,791,060 Total assets 518,355,537 Capital Expenditures Internet 508,082 Energy 36,756,005 Total capital expenditures _39,264,087 CHUGACH ELECTRIC ASSOCIATION, INC. State Financial Assistance Reports Year ended December 31, 1999 CHUGACH ELECTRIC ASSOCIATION, INC. Table of Contents Independent Auditors’ Report on Schedule of State Financial Assistance Schedule of State Financial Assistance Notes to Schedule of State Financial Assistance Independent Auditors’ Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditors’ Report on Compliance for a State Single Audit Independent Auditors’ Report on the Internal Control Structure for a State Single Audit Page(s) 6-7 rae 601 West Fifth Avenue Suite 700 Anchorage, AK 99501-2258 Independent Auditors’ Report on Schedule of State Financial Assistance The Board of Directors Chugach Electric Association, Inc.: We have audited the financial statements of the Chugach Electric Association, Inc. (Chugach) as of and for the year ended December 31, 1999, and have issued our report thereon dated February 25, 2000. These financial statements are the responsibility of Chugach’s management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards and Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. Our audit was made for the purpose of forming an opinion on the financial statements of Chugach Electric Association, Inc. taken as a whole. The accompanying Schedule of State Financial Assistance is presented for purposes of additional analysis and is not a required part of the basic financial statements. The information in the schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly presented, in all material respects in relation to the financial statements taken as a whole. KPMG LIP February 25, 2000 KPMG LLP. KPMG LLP. a U.S. limited inabyi a member of KPMG International. a Swiss, CHUGACH ELECTRIC ASSOCIATION, INC. Schedule of State Financial Assistance Year Ended December 31, 1999 Deferred Grant cash Interest Total allowable Deferred Grant revenue receipts receipts expenditures revenue Name of award award Jan. 1, 1999 during year during year during year Dec. 31, 1999 Department of Administration: Direct: Southern Intertie Route Selection $ 48,000,000 (86,656) 985,191 19,246 599,719 (491,374) CHUGACH ELECTRIC ASSOCIATION, INC. Notes to Schedule of State Financial Assistance Year Ended December 31, 1999 General The accompanying Schedule of State Financial Assistance presents the activity of all state financial assistance programs of Chugach. Chugach’s reporting entity is defined in note 1 to Chugach’s financial statements. State financial assistance received directly from state agencies as well as state financial assistance passed through other government agencies is included on the schedule. Basis of Accounting The accompanying Schedule of State Financial Assistance is presented using the accrual basis of accounting, which is described in note 1 to Chugach’s financial statements. Deferred Revenue at December 31, 1999 Deferred revenue at December 31, 1999 included amounts received from the State of Alaska in excess of amounts expended, amounts payable from the program’s restricted cash account to Chugach’s general cash account and accrued expenditures. Raa 601 West Fifth Avenue Suite 700 Anchorage, AK 99501-2258 Independent Auditors’ Report on Compliance and on Internal Control over Financial Reporting Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards The Board of Directors Chugach Electric Association, Inc.: We have audited the financial statements of Chugach Electric Association, Inc. (Chugach) as of and for the year ended December 31, 1999, and have issued our report thereon dated February 25, 2000. We conducted our audit in accordance with generally accepted auditing standards and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. As part of obtaining reasonable assurance about whether Chugach’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance that are required to be reported under Government Auditing Standards. In planning and performing our audit, we considered Chugach’s internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinion on the financial statements and not to provide assurance on the internal control over financial reporting. Our consideration of the internal control over financial reporting would not necessarily disclose all matters in the internal control over financial reporting that might be material weaknesses. A material weakness is a condition in which the design or operation of one or more of the internal control components does not reduce to a relatively low level the risk that misstatements in amounts that would be material in relation to the financial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control over financial reporting and its operation that we consider to be material weaknesses. This report is intended solely for the information and use of Chugach’s Board of Directors, management and state awarding agencies and is not intended to be and should not be used by anyone other than these specified parties. KPMG LEP February 25, 2000 KPMG LLP KPMG LLP. a US. limited liability partnership, 1s = 4 a member of KPMG International, a Swiss association Rana 601 West Fifth Avenue Suite 700 Anchorage, AK 99501-2258 Independent Auditors’ Report on Compliance for a State Single Audit The Board of Directors Chugach Electric Association, Inc.: We have audited the financial statements of the Chugach Electric Association, Inc. (Chugach) as of and for the year ended December 31, 1999, and have issued our report thereon dated February 25, 2000. As part of obtaining reasonable assurance about whether the financial statements and the major state assistance program are free of material misstatement, we have applied procedures to test Chugach’s compliance with certain provisions of laws and regulations and with the general requirements applicable to its state financial assistance programs and the specific requirements that are applicable to its major state financial assistance program, which is identified in the accompanying schedule of state financial assistance, for the year ended December 31, 1999. The management of Chugach is responsible for Chugach’s compliance with those requirements. Our responsibility is to express an opinion on compliance with those provisions and requirements based on our audit. We conducted our audit in accordance with generally accepted auditing standards, Government Auditing Standards issued by the Comptroller General of The United States, and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Those standards and the audit guide require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether material noncompliance with the requirements referred to above occurred. An audit includes examining, on a test basis, evidence about Chugach’s compliance with those provisions and requirements. We believe that our audit provides a reasonable basis for our opinion. In our opinion, Chugach complied, in all material respects, with the provisions of laws and regulations and the applicable general requirements governing its state financial assistance program and with the specific requirements that are applicable to its major state financial assistance program for the year ended December 31, 1999. This report is intended solely for the information and use of Chugach’s Board of Directors, management and state awarding agencies and is not intended to be and should not be used by anyone other than these specified parties. KPI LEP February 25, 2000 KPMG LLP KPMG LLP. a US limited liabuity partnership,is 5 ‘a member of KPMG International, a Swiss association Fava 601 West Fifth Avenue Suite 700 Anchorage, AK 99501-2258 Independent Auditors’ Report on the Internal Control Structure for a State Single Audit The Board of Directors Chugach Electric Association, Inc.: We have audited the financial statements of Chugach Electric Association, Inc. (Chugach) as of and for the year ended December 31, 1999, and have issued our report thereon dated February 25, 2000. We have also audited Chugach’s compliance with general requirements and specific requirements applicable to the major state financial assistance program and have issued our report thereon dated February 25, 2000. We conducted our audits in accordance with generally accepted auditing standards, Government Auditing Standards issued by the Comptroller General of The United States, and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Those standards and the audit guide require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement and about whether Chugach complied with laws and regulations, noncompliance with which would be material to a major state financial assistance program. The management of Chugach is responsible for establishing and maintaining an internal control structure. In fulfilling this responsibility, estimates and judgments by management are required to assess the expected benefits and related costs of internal control structure policies and procedures. The objectives of an internal control structure are to provide management with reasonable, but not absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, that transactions are executed in accordance with management’s authorization with generally accepted accounting principles, and that state financial assistance programs are managed in compliance with applicable laws and regulations. Because of inherent limitations in any internal control structure, errors, irregularities, or instances of noncompliance may nevertheless occur and not be detected. Also, projections of any evaluation of the structure to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or that the effectiveness of the design and operation of policies and procedures may deteriorate. In planning and performing our audit of the financial statements of Chugach for the year ended December 31, 1999, we obtained an understanding of the internal control structure. With respect to the internal control structure, we obtained an understanding of the design of relevant policies and procedures and whether they have been placed in operation, and we assessed control risk in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and on compliance with general requirements and requirements applicable to major state financial assistance programs and not to provide an opinion on the internal control structure. Accordingly, we do not express such an opinion. KPMG LLP KPMG LLP. 3 US. limited lability partnership. :s & a member of KPMG International. a Swiss association KOM The Board of Directors Chugach Electric Association, Inc. Our consideration of the internal control structure would not necessarily disclose all matters in the internal control structure that might be reportable conditions and, accordingly, would not necessarily disclose all reportable conditions that are also considered to be material weaknesses. A material weakness is a reportable condition in which the design or operation of one or more of the internal control structure elements does not reduce to a relatively low level the risk that (1) errors or irregularities in amounts that would be material in relation to the financial statements being audited or (2) noncompliance with laws and regulations that would be material to the state programs being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned functions. We noted no matters involving the internal control structure and its operation that we consider to be material weaknesses as defined above. This report is intended solely for the information and use of Chugach’s Board of Directors, management and state awarding agencies and is not intended to be and should not be used by anyone other than these specified parties. KPMG LIP February 25, 2000 —____» Bgae>,~.— - —___ Eugene N. Bjornstad, P.E. POWERING ALASKA’S FUTURE General Manager June 21, 2000 Mr. Randy Simmons Executive Director Alaska Industrial Development and Export Authority 480 West Tudor Road Anchorage, Alaska 99503 Subject: Southern Intertie Project - NEPA/ANILCA Application EIS Process Funding Requirements Dear Mr. Simmons: This is a request on behalf of the Intertie Participant Group (IPG) to increase the funding for Phase I of the Southern Intertie Project to $7,500,000 in accordance with Paragraph 4.02.a of The Grant Administration Agreement. An Environmental Impact Statement (EIS) for the Project is being prepared by an independent consultant under the direction of the federal lead agency, the Rural Utility Service (RUS) and in conjunction with the cooperating agencies, US Fish and Wildlife Service (USFWS) and the US Department of the Army, Corps of Engineers (COE). The IPG, as the Applicant, is obligated to pay for efforts undertaken on the Project’s behalf by the agencies and provide technical assistance to the agencies and their contractors. Funding originally allocated to this phase of the project has been exhausted over the past 5 years in the preparation of a Routing Study and an Environmental Analysis (EVAL) to assist the federal agencies in their EIS preparation. Extensive public involvement and work performed at the direction of federal agencies have resulted in higher than anticipated costs for these efforts. Recent experience on similar projects leads us to believe that even higher costs should be anticipated when the agencies deal with the comments to the Draft EIS (DEIS) after the public review period and challenges to the Final EIS (FEIS) and Record of Decision (ROD). An application for a special use permit in the Kenai National Wildlife Refuge (KNWR) for the project has been filed with three federal agencies (Rural Utility Services - RUS, Fish and Wildlife Chugach Electric Association, Inc. 5601 Minnesota Drive, PO. Box 196300, Anchorage, Alaska 99519-6300 © (907) 563-7494 Fax (907) 562-0027 © (800) 478-7494 www.chugachelectric.com © info@chugachelectric.com Mr. Randy Simmons, Executive Director Page 2 of 2 June 21, 2000 Service - USFWS, Army Corps of Engineers - COE). The application was made in August of 1999 under ANILCA provisions. It included submittal of the EVAL. The analysis was made in close cooperation with RUS and USFWS/KNWR and encompasses all information considered necessary to allow the agencies conversion of the document into an EIS with minimum effort and delay. RUS, the lead agency for the EIS preparation, has hired an independent consultant, Mangi Environmental, to prepare the documents from the EVAL. Mangi has had numerous requests for additional information and clarifications related to the EVAL. The IPG’s consultants have answered most of the requests, but funding intended to lead to the completion of the DEIS has paid for these efforts. RUS/Mangi have issued a draft of a preliminary Draft EIS for agency review without resolving all issues raised. Outstanding issues will be addressed during review meetings between the agencies and the respective consultants. We estimate that additional work in the amount of $1,000,000 may be required just to complete the Draft EIS to the agencies’ satisfaction. Project expenditures stand at approximately $5,500,000 and funding is authorized to $5,900,000. The first increase of $800,000 over the original Phase I allocation of $5,100,000 was approved in June of 1998. As you may recall, the Phase I funding figure was an estimate made six years ago. The effort required to assist the agencies in completing the NEPA process to the ROD after the DEIS is published is now estimated to cost an additional $1,000,000. That leaves a shortfall of $1,600,000. A summary of expenditures to date and anticipated funding needs is attached. In the Grant Administration Agreement Schedule A-2, route selection is required. We are not yet at that point. The IPG has authorized us to request $1,600,000 to assist in the NEPA related work for the project and we ask that the spending limit for Phase I of the Southern Intertie Project be amended accordingly and the funds be released. The fact that the additional environmental studies could not be accurately anticipated in the Phase I funding ceiling should be considered a significant factor in this rapist: Disapproval will seriously impact the progress and completion of Phase I. Should you have any questions, please contact me or our Project Manager, Dora Gropp at 762-4626. Sincerely, CHUGACH ELECTRIC ASSOCIATION, INC. Sno het General Manager CHUGACH ELECTRIC ASSOCIATION |. FUNDING REQUIREMENTS (PHASE 1) CONTRACT /ACTIVITY cost ROUTE SELECTION (70 696) PROJECT PHASE PHILA CONSULTANT $814,794 AGENCIES RUS/Mangi $0 USFWs $0 USFS so cel $0 PROJECT MANAGEMENT $79,095 TOTAL $893,889 ll. CASH FLOW (ENTIRE PROJECT) CONTRACT /ACTIVITY TOTAL PHASE I - AUTHORIZED $5,100,000 AMENDMENT 6/98 $800,000 TOTAL AUTHORIZED $5,900,000 (CUMMULATIVE) TOTAL PROJECTED (CUMMULATIVE) TOTAL ACTUAL (CUMMULATIVE) ‘St$sched.xisNEPA BUDGET cost NEPA TO EVAL (TO 9799) PHI-B $3,891,368 $80,793 $45,916 $7,854 $0 $189,475 $4,215,406 1995 $196,275 $196,275 $196,275 $196,275 $196,275 $56,420 $56,420 cost NEPA-EISTO ROD (TO 06/01) PHI-C $1,700,000 $200,000 $30,000 so $30,000 $200,000 $2,160,000 1996 $1,761,159 $1,761,159 $1,957,434 $1,761,159 $1,957,434 $1,774,604 $1,831,024 CONTINGENC NEPA-EIS TO ROD (70 07701) PHI-C $170,000 $20,000 $10,000 $o $10,000 $20,000 $230,000 1997 $2,007,375 $2,007,375 $3,964,809 $2,007,375 $3,964,809 $2,153,070 $3,984,094 SOUTHERN INTERTIE TOTAL PROJECT EXPENDITURES AS OF 5/00 PH LA $893,889 CORRIDOR STUDY PHB. $4,215,406 EVAL $6,576,162 PHC $379,552 NEPA [TOTAL $5,488,847 $300,793 $85,916 $7,854 $40,000 $488,570 $7,499,295 1998 1999 2000 2001 2002 $850,000 $285,191 $450,000 $350,000 $850,000 $735,191 $350,000 $0 $0 $4,814,809 $5,550,000 $5,900,000 $5,900,000 $5,900,000 $850,000 $735,191 $1,000,000 $450,000 $3,500,000 $4,814,809 $5,550,000 $6,550,000 $7,000,000 $10,500,000 $650,980 $596,671 $4,635,074 $5,231,745 Page 1 so $5,900,000 $20,000,000 $30,500,000 2004 2005 so so $5,900,000 $5,900,000 $34,000,000 $38,000,000 $64,500,000 $102,500,000 CASH FLOW PROJECTIONS 6/16/00